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公司公告

冰山B:2023年年度报告(英文版)2024-04-26  

                        Bingshan Refrigeration & Heat Transfer
        Technologies Co., Ltd.
          2023 Annual Report




             April, 2024


                  1
    Section 1 Important Notice, Table of Contents, and Definitions

The directors and the Board of Directors, the supervisors and the Supervisory
Board, and Senior staff members of Bingshan Refrigeration & Heat Transfer
Technologies Co., Ltd. (hereinafter referred to as the Company) hereby confirm
that there are not any important omissions, fictitious statements or serious
misleading carried in this report, and shall take all responsibilities, individual
and/or joint, for the reality, accuracy and completeness of the whole contents.

Chairman of the Board of Directors of the Company Mr. Ji Zhijian, Financial
Majordomo Mrs. Wang Jinxiu and the head of Accounting Department Mr. Li
Sheng hereby confirm that the financial report of the annual report is true and
complete.

All the directors have attended this Board meeting of the Company.

There is no significant risk having adverse influence on attainment of the
Company's future development strategy and business targets. The paragraph "
The prospect of the Company's future development " in Section 3 of this Annual
Report describes major risks the Company may be confronted with, including
the risk of Increasing market competition risk, the market promotion for new
product and new technology slow, and the Accounts receivable is on the high side.
See the related sections for the countermeasures to be taken by the Company.

The profit distribution proposal reviewed and adopted at this Board meeting of
the Company is: Based on the total capital stock of 843,212,507 shares, the
dividend of RMB 0.3 in cash (including tax) will be distributed for every 10
shares; The Company will not transfer the capital reserve to increase capital
stock.

This report is written respectively in Chinese and in English. In the event of any
discrepancy between the two above-mentioned versions, the Chinese version
shall prevail.




                                        2
                                                                CONTENTS
Section 1 Important Notice, Table of Contents, and
Definitions……………………………………………………………...................................................…………...2
Section 2 About the Company and Main Financial Indicators .................................................................................. 6
Section 3 Management discussion and analysis ........................................................................................................ 9
Section 4 Corporate governance .............................................................................................................................. 20
Section 5 Environmental and social responsibility .................................................................................................. 29
Section6Importantitems……………………………………………………………………………………….……30
Section 7 Change in Share Capital and Shareholders' Information…………………………………… ...……... ...34
Section 8 Information on Preferred Stock ............................................................................................................... 37
Section 9 Information on Corporate bonds .............................................................................................................. 38
Section 10 Financial Report..................................................................................................................................... 39




                                                                                3
                                      Reference Documents

The accounting statements bearing the signatures and seals of the legal representative, the financial majordomo
and the accountants in charge.
2. The original copies of all the Company's documents and the original copies of the bulletins published on the
newspapers designated by the China Securities Regulatory Commission in the report period.
3. Time for reference: from Monday to Friday 8:00 - 11:30 (am)     1:00 - 4:30 (pm)
Liaison persons: Mr. Song Wenbao, Ms Du Yu

Tel: 0086-411-87968130

Fax: 0086-411-87968125




                                                      4
                                                       Definitions



         Defined item         Stands for                                          Meaning

Reporting period             Stands for From Jan. 1, 2023 to Dec. 31 2023

The Company, this Company    Stands for Bingshan Refrigeration & Heat Transfer Technologies Co.,Ltd.
                                           Dalian Bingshan Group Engineering Co., Ltd.,one of the subsidiaries of the Company where
Bingshan Engineering Company Stands for
                                           the Company holds 100% of its shares.
                                           Sonyo Compressor (Dalian) Co., Ltd. Formerly Panasonic Appliances Compressor (Dalian)
Sonyo Compressor             Stands for    Co., Ltd. one of the subsidiaries of the Company, where the Company holds100% of its
                                           shares.
                                           Sonyo Refrigeration (Dalian) Co., Ltd. Formerly Panasonic Appliances Air-conditioning
Sonyo Refrigeration          Stands for     and Refrigeration (Dalian) Co., Ltd., one of the subsidiary of the Company, where the
                                            Company holds 100% of its shares indirectly.
                                           Wuhan New World Refrigeration Industry Co., Ltd., one of the subsidiaries of the Company
Wuxin Refrigeration          Stands for
                                           where the Company holds 100% of its shares.
                                           Dalian Bingshan Guardian Automation Co., Ltd. one of the subsidiaries of the Company
Bingshan Guardian            Stands for
                                           where the Company holds 100% of its shares.




                                                                 5
             Section 2 About the Company and Main Financial Indicators
   Company information

Short form of the stock                  Bingshan; Bingshan B
Stock code                               000530; 200530
Listed stock exchange                    Shenzhen Stock Exchange
Legal name in Chinese                    冰山冷热科技股份有限公司
Legal name abbreviation in Chinese       冰山冷热
Legal English name                       Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd.
Legal English name abbreviation          Bingshan
Legal representative                     Ji Zhijian
Registered address                       No.106, Liaohe East Road, Dalian Economic and Technological Development Zone
Post code of Registered address          116630
                                         Due to the overall relocation, the registered address of the Company was changed
Historical changes of the Company's
                                         from 888 Southwest Road, Shahekou District, Dalian to 106 Liaohe East Road,
registered address
                                         Dalian Economic and Technological Development Zone in March 2017.
Office address                           No.106, Liaohe East Road, Dalian Economic and Technological Development Zone
Post code of Office address              116630
Internet web site of the Company         www.bingshan.cn
E-mail of the Company                    000530@bingshan.com

   II. Contact persons and information

                      Secretary of the Board of Directors              Authorized representative for securities affairs
Name         Song Wenbao                                            Du Yu
             Bingshan Securities﹠Legal Affairs No.106, Liaohe      Bingshan Securities﹠Legal AffairsNo.106, Liaohe
Address      East Road, Dalian Economic and Technological           East Road, Dalian Economic and Technological
             Development Zone                                       Development Zone
Tel.         0411-87968130                                          0411-87968822
Fax          0411-87968125                                          0411-87968125
E-mail       000530@bingshan.com                                    000530@bingshan.com

   III. Information disclosure and place of preparation for inquiry

    Stock exchange website where companies disclose annual
                                                                 Shenzhen Stock Exchange
    reports
    Name of the newspaper designated the address of the          China Securities Daily, Securities Times and
    website for publishing this Annual Report                    http://www.cninfo.com.cn
    Place where this Annual Report was prepared for inquiry      Securities﹠Legal Affairs Department of the Company


   IV. Alteration to the registration
    Organization code                                         912102002423613009
    Change in main business since the Company was listed No change
    Changes in the holding shareholder                        No change

                                                            6
        V. Other related information

        Accounting firm engaged by the Company
 Name of accounting firm                     ShineWing CPAs (Special General Partnership)
 Office location of accounting firm          9/F,A Building No.,8 north street of Chao Yang Men, Dong Cheng District Beijing, China
 Name of signing certified public accountant Sui Guojun, Zhang Shizhuo
        Sponsor the Company appointed for performance of the consistent supervision duty in the reporting period
        □ Applicable √ Not applicable
        Financial consultant the Company appointed for performance of the consistent supervision duty in the reporting
        period
         Applicable □ Not applicable
                                             Office location of accounting       Name of sponsor of financial        Continuous supervision
         Name of Financial consultant
                                                          firm                             advisor                          period
                                          Guotai Junan Building, 768
        Guotai Junan Securities Co.,                                                                              From November 11, 2022 to
                                          Nanjing West Road, Jing 'an        Dong Shuai、Li Xiang
        LTD                                                                                                       December 31, 2023
                                          District, Shanghai



        VI. Main accounting data and financial indicators
        Did the Company retroactively adjust or restate the accounting data of previous years due to change in the
        accounting policy and correction of accounting mistakes?
        √Applicable □ Not applicable


                                                                                                      Increase/decrease compared with
                                                           2023                      2022                                                     2021
                                                                                                               previous year


Operating revenue                                      4,815,941,467.70          2,893,085,310.29                              66.46%    2,089,208,256.22

Net profit attributable to shareholders of listed
                                                           49,375,900.83             18,731,969.48                             163.59%   -269,606,893.80
companies
Net profit belonging to the shareholders of
listed companies after the deduction of                    16,483,449.17          -272,983,508.15                              106.04%   -355,596,997.40
non-recurring profit and loss

Net cash flow from operating activities                   -24,440,667.74            -56,247,299.36                             56.55%         1,518,218.37

Basic earnings per share                                             0.06                      0.02                            200.00%                -0.32

Diluted earnings per share                                           0.06                      0.02                            200.00%                -0.32

Weighted average return on net asset yield                        1.63%                     0.61% Inecrease 1.02 percentage points                   -8.31%


                                                                                                      Increase/decrease compared with
                                                        2023.12.31                2022.12.31                                              2021.12.31
                                                                                                               previous year


Total assets                                           8,162,848,294.25          7,601,935,329.60                               7.38%    5,735,570,604.67
Owner's equity attributable to shareholders of
                                                       3,047,513,577.75          3,006,120,427.03                               1.38%    3,002,295,794.00
listed companies
        The lower of the Company’s net profit before and after deduction of non-recurring gains and losses in the most
        recent three fiscal years are all negative, and the audit report in the last year shows that the Company's ability to
        continue operations is uncertain
        □ Applicable √ Not applicable

                                                                             7
       The lower of the net profit before and after non-recurring gains and losses is negative
       □ Applicable √ Not applicable

       VII.1.Difference of accounting data between as per Chinese accounting standards and as per
       International Accounting Standards
       □ Applicable √ Not applicable
       2. Difference of accounting data between as per Chinese accounting standards and as per
       Foreign Accounting Standards
       The difference of accounting data between as per Chinese Accounting Standards and as per International
       Accounting Standards was 0.
       3.Explanation of reasons for differences in accounting data under domestic and foreign
       accounting standards
       √Applicable □Not applicable
       The difference of accounting data between as per Chinese Accounting Standards and as per International
       Accounting Standards was 0.

       VIII. The quarter main financial indicators
                                                              the first quarter   the second quarter   the third quarter    the fourth quarter
Operating revenue                                             1,072,560,425.76 1,254,976,287.29 1,274,571,520.64             1,213,833,234.01
Net profit attributable to shareholders of listed companies      25,392,393.54        32,022,005.68       14,469,128.62        -22,507,627.01
Net profit belonging to the shareholders of listed
companies after the deduction of non-recurring profit and        13,312,360.06        32,145,810.46        1,479,838.85        -30,454,560.20
loss
Net cash flow from operating activities                       -158,425,157.75         31,630,960.77      -39,477,287.33       141,830,816.57


       IX. Non-recurring profits and losses and their amounts
                                    item                                             2023                    2022                  2021
  Disposal gains and losses of non-current asset                                      -6,656,241.40       109,194,830.34         27,724,344.91

  Government subsidies included in current profit or loss                              8,263,130.89         11,878,746.43        15,993,001.31

  Debt restructuring gains and losses                                                  1,791,602.29            230,467.42           819,297.68

  Profit or loss arising from contingencies unrelated to the
                                                                                      10,206,786.86         -2,019,000.00
  normal operation of the company
  Disposal gains from investments on financial assets
  available for sale, and gains from fair value change of                             14,073,910.32         -3,694,509.36        55,245,024.14
  financial assets available for sale
  Reversal of impairment provisions for accounts receivable
                                                                                       3,784,207.57
  subject to separate impairment testing
  The one-time expenses incurred by the enterprise due to the
                                                                                       3,928,060.93
  discontinuation of related business activities
  Other non-operating revenue or expense                                               2,831,968.96          8,754,118.59        -5,129,941.48
  Other profit and loss items that meet the definition of non
                                                                                                          170,729,805.79
  recurring profit and loss
  Influence on income tax                                                              5,162,725.13          2,961,966.70         8,490,868.44
  Influence on minority shareholders                                                     168,249.63            397,014.88           170,754.52
  Total                                                                               32,892,451.66       291,715,477.63         85,990,103.60

                                                                          8
                   Section 3 Management discussion and analysis
The industry situation of the Company during the reporting period
1. Industry development trend
In recent years, the refrigeration and air conditioning industry has played an increasingly prominent role in
national strategies such as food safety, energy security, consumption upgrading, energy conservation and carbon
reduction. The high-end, digital, green, and service-oriented development of the industry has been rapid.
In 2023, the refrigeration and air conditioning industry is still facing a complex domestic and international market
situation, with intensified market competition, difficulties in improving efficiency, and high accounts receivable,
which continue to plague the operation and development of the industry.
In 2024, industry development will continue to differentiate and competition will continue to intensify. The
transformation and upgrading of major enterprises in the industry will accelerate, and the pace of high-quality
development will become more stable.
2. Challenges and opportunities faced by the Company
(1)Opportunities faced by the Company
Energy conservation, carbon reduction and improving energy efficiency have become the consensus of the whole
society; Overall promotion of the national "double carbon" strategy; The 14th five year plan for the development
of cold chain logistics has been issued, and the market demand for cold chain equipment is expected to grow
rapidly; With the promulgation of the new cold storage design standard, the use opportunities of ammonia
refrigerant have increased.
With the strong technology bases, innovative business model, and system advantages, the Company is capable of
capturing the above opportunities in a good position.
(2)Challenges faced by the Company
The cultivation of energy conservation and emission reduction market still needs time; the transformation and
upgrading process is complex.

II. The Company’s Main business during the reporting period
Focusing on the hot and cold industry, the Company is committed to the development of industrial
refrigeration and heating business, commercial refrigeration business, air conditioning and environment
business, engineering and service business and new business fields, covering the key areas of the hot and
cold industry chain and creating a complete hot and cold industry chain.
The Company's main products include piston and screw refrigeration compressors/units, as well as pressure
vessels, combination warehouses, controlled atmosphere preservation warehouses, refrigeration stations, etc.
The Company provides product sales and comprehensive solutions for both domestic and international
markets, with self operated sales as the main focus and channel sales as the auxiliary.
In 2023, rigid demands such as food safety, energy security, consumption upgrading, energy conservation
and carbon reduction will benefit the refrigeration and air conditioning industry; At the same time, the
refrigeration and air conditioning industry is also facing issues such as intensified market competition and
difficulties in improving efficiency. Faced with opportunities and challenges, the Company focuses on the
hot and cold industries, continuously delving into advantageous segmented markets such as cold chain
logistics, petrochemicals, beer and dairy products, meat slaughter, ship refrigeration, ice and snow venues,
polycrystalline silicon, and vigorously expanding new businesses such as CCUS, ORC, energy storage
thermal management, actively expanding and seizing the domestic market.
1. Industrial refrigeration and heating business

                                                         9
Industrial refrigeration is an important field reflecting the core technology of the Company. After years of
development, the Company has been close to the technical level of the main international competitors in the
field of industrial refrigeration, and has achieved catching up in some fields. Based on the traditional
refrigeration, the Company realizes the balance of cold and heat through the utilization of heat, which greatly
improves the energy utilization rate.
During the reporting period, the Company signed multiple projects with industry giants such as BASF,
Covestro, PetroChina, and Sinopec, and the influence of Bingshan brand in the industry continued to
increase.
2. Commercial refrigeration business
Commercial refrigeration is the Company's core business. In China, the Company takes the lead in opening
up the green intelligent cold chain from the first kilometer of the field to the last 100 meters of the residential
community, which is the competitive advantage of the Company.
Focusing on food refrigeration, the Company has patented products pre-cooling from the field, all kinds of
quick freezing equipment and refrigeration facilities of various specifications, and China's leading experience
in the design and installation of large-scale ammonia and carbon dioxide refrigerators. On the basis of
absorbing the relevant experience of Japan, Europe and the United States, combined with China's new needs,
to provide newer products, better solutions and fresher experience for the field of food freezing and
refrigeration.
During the reporting period, the Company successfully signed multiple key projects, including the expansion
project of the Red Star Cold Chain Direct Supply Center, the Fengchu Langfang Central Kitchen project, the
Shanxi Wuzhai Quick Frozen Corn project, and the supply and marketing cold chain logistics project.
3. Air conditioning and environment business
In recent years, relying on the complete industrial chain, the Company has continuously carried out
transformation and upgrading in the field of air conditioning and environment, developed more
energy-saving and environmental protection products around the blue sky project, and accelerated the
transformation and upgrading from air treatment to environmental governance.
At present, the Company has developed a series of innovative products around the market segments of
commercial air conditioning, central air conditioning and special air conditioning, and provides
corresponding solutions in different segments around these innovative products. For hospitals, electronic
factories, high-end real estate, rail transit and other fields, provide targeted solutions.
During the reporting period, the Company increased its investment in its subsidiary, Bingshan Air
Conditioning, by 30 million yuan to support the development of the air source heat pump industry.
4. Engineering and service business
Cold and hot engineering and service are the Company's advantageous business fields. In recent years, the
Company has realized transformation and upgrading from the manufacturer of cold and hot equipment to the
service provider of comprehensive solution of cold and hot through the development of engineering and
service industry, and realized the dual wheel drive of the enterprise, and provided more professional and
accurate services to each segment market, and constantly created new value for customers and realized
common growth.
At present, the Company focuses on petrochemical technology, refrigeration, central air conditioning, ice and
snow engineering, artificial environment and other market segments. Relying on the enterprise's industrial
chain, value chain and ecosystem, the Company provides services from consulting, planning, design to
manufacturing, installation, commissioning and service in the whole process and life cycle. At the same time,
according to the needs of customers, promote the combination of industry and finance, and provide services

                                                        10
for customers through the form of project general contracting and financial leasing.
During the reporting period, the Company increased its investment in its subsidiary Bingshan Engineering by
100 million yuan and strengthened the construction of large-scale engineering platforms.
5. New business
With the deepening of China's economic transformation and upgrading, as well as the continuous
introduction of environmental governance policies, the domestic industrial energy conservation and
environmental protection industry is growing rapidly, the level of energy conservation and consumption
reduction of enterprises and the comprehensive utilization of resources is constantly improving, and the
energy industrial structure has changed. Strengthening the optimal utilization of energy has become a
development trend. For low-grade energy recycling, the Company provides customers with a series of
energy-saving, environmental protection, efficient new products, in line with the national strategic
requirements of energy conservation, carbon reduction and sustainable development, and contributes
professional wisdom to the national carbon peak and carbon neutral strategy.
During the reporting period, the Company made good progress in new businesses such as CCUS, ORC, and
energy storage thermal management.

 III. Analysis of core competence
The Company focuses on main business of refrigeration and heating; independent R&D and joint
venture partnerships are cooperate with each other effectively; capital resources integration and
business model innovation are in a positive interaction; the community of business and interest are
being multi-storey created; the develop mode with Bingshan characteristic are formed.
The Company has the integrated refrigeration and heating industrial chain for offering kinds of
comprehensive solution services, including design, manufacture, installation and maintenance etc.,
and can satisfy individual requirements preferably.
The Company possesses a mature and solid marketing networks and after-sale service network
on/off-line, and can offer high quality and high value-added services more initiative and faster for
clients from around the city.
Following the technical route of cold and heat balance, the Company has independently developed a
series of energy-saving, environment-friendly, efficient and intelligent cold and heat technologies
and products, and actively fulfilled the dual carbon responsibility.
While promoting the transformation and upgrading of its inherent business in an orderly manner,
the Company actively cultivates new momentum for development, and the path of sustainable
growth is increasingly clear.
During the reporting period, the Company focused on the hot and cold business, deeply cultivated
the market segment, and steadily improved its sales force, product force, technical force,
engineering force and service force, so as to further enhance its core competitiveness.

IV. Analysis of main business
1. summarize
In 2023, the Company focuses on the hot and cold business, deeply cultivates segmented markets, solidly
enhances core competitiveness, effectively expands industry influence, and continuously strengthens its main
business. In 2023, the Company achieved an operating revenue of 4,815.94 million yuan, an increase of
66.46% year-on-year; The net profit attributable to the shareholders of the listed company was 49.38 million
yuan, , an increase of 163.59% year-on-year.

                                                     11
During the reporting period, the Company adhered to principles of innovation and accelerated development.
We have independently developed multiple outstanding products, including CO2 transcritical products, heat
pump products, and energy storage thermal management products. The Company's CO2 boosting
liquefaction device was selected as an innovative product at the 2023 China Refrigeration Exhibition. The
Company's falling film semi enclosed screw ice water unit has been selected for the 2022 China
Refrigeration Society Energy Conservation and Ecological Environment Product and Technology Catalog.
The key technology research and industrialization of the Company's CO2 subcritical and transcritical cold
and heat coupling system has won the first prize of Dalian Science and Technology Progress Award. The
Company has been listed as a "Green Factory" in the 2023 Green Manufacturing List of the Ministry of
Industry and Information Technology.

During the reporting period, the subsidiary of the Company, Bingshan Engineering Company, and Sonyo
Refrigerator, collaborated efficiently and continued to deepen their market segmentation. In the field of
product business, actively serving high-end customers, and signing multiple projects with industry giants
such as BASF, Covestro, PetroChina, and Sinopec; Continue to lead the polysilicon market and vigorously
expand the lithium chemical market. In the field of engineering, multiple key projects including the
expansion project of Red Star Cold Chain Direct Supply Center, Fengchu Langfang Central Kitchen Project,
Shanxi Wuzhai Quick Frozen Corn Project, and Supply and Marketing Cold Chain Logistics Project have
successfully won the bid. In the field of energy industry, CCUS projects and energy storage thermal
management projects have been rapidly promoted.

During the reporting period, the Company's subsidiary, Sonyo Compressor, achieved independent innovation
and qualitative growth. R290 DC variable frequency vortex compressor for heat pump hot water has been
selected as an innovative product at the 2023 China Refrigeration Exhibition. The high-power vortex
compressor used in air source heat pump units has been selected as the "Guiding Catalogue for the
Promotion and Application of Liaoning Province's First (Set) Major Technical Equipment". Awarded as a
national level intelligent manufacturing excellent scene, provincial-level intelligent factory, provincial-level
green factory, and provincial-level quality benchmark. Awarded the title of "Excellent Supplier" by Songz
and Tongfei, with orderly expansion of energy storage facilities.

During the reporting period, the Company's newly added subsidiary, Sonyo Refrigeration, implemented
business adjustments to pursue synergies. Peel off the multi unit air conditioning business and focus on the
industrial energy-saving market, resulting in a significant year-on-year increase in orders. The marine lithium
bromide absorption refrigeration unit has been selected as the "Guiding Catalogue for the Promotion and
Application of the First (Set) Major Technical Equipment in Liaoning Province". Independently developing
Stirling flue gas generators to help reduce the cost of gas heat pump air conditioning products.

During the reporting period, the Company's subsidiary, Wuhan New World Refrigeration continued to
optimize its products and solutions. Professional support for energy security, with a significant increase in
sales of underground cooling devices in mines. Optimize the development of oil-free screw compressors and
actively expand the gas compression market. The water vapor screw compressor unit was selected as an
innovative product at the 2023 China Refrigeration Exhibition and the 2022 China Refrigeration Society
Energy Conservation and Ecological Environment Product and Technology Catalog.

                                                      12
During the reporting period, the subsidiary of the Company, Bingshan Guardian, focused on energy-saving
control and innovative development of cold and hot systems. Develop a battery management system for all
vanadium flow battery control systems, and collaborate deeply with key customers such as Rongke Power
and Kaifeng Times Power. Building a 5G fully connected factory and rapidly advancing digital
transformation. Selected as a pilot demonstration enterprise for the integrated application of "5G+Industrial
Internet".

2. Sales income and costs
(1) Sales income structure
                                                 2023                                                 2022
                                                                                                                                         Year-on-year
                                                        Proportion to the                                    Proportion to the
                                 Amount                                                Amount                                         increase/decrease
                                                           Sales costs                                          Sales costs
Total sales income          4,815,941,467.70                         100%            2,893,085,310.29                       100%                    66.46%
By industry
Refrigeration and
air-conditioning            4,708,789,817.06                        97.78%           2,803,347,359.37                    96.90%                     67.97%
equipment
Others                          107,151,650.64                       2.22%              89,737,950.92                      3.10%                    19.41%
By product
Industrial product          3,357,438,836.06                        69.72%           1,920,458,161.82                    66.38%                     74.82%
Installation works          1,294,663,341.77                        26.88%             857,764,430.03                    29.65%                     50.93%
Others                        163,839,289.87                         3.40%             114,862,718.44                     3.97%                     42.64%


Domestic sales              4,278,214,645.22                        88.83%           2,713,167,600.04                    93.78%                     57.68%
Foreign sales                 537,726,822.48                        11.17%             179,917,710.25                     6.22%                    198.87%
(2) Main business structure
                                                                                     Increase/decrease of Increase/decrease
                                                                                      operating revenues of operating costs Increase/decrease of gross profit on
                           Operating revenue      Operating costs    Gross profit
                                                                                       on a year-on-year on a year-on-year         a year-on-year basis
                                                                                             basis              basis
By industry
Refrigeration and
                            4,708,789,817.06      3,931,870,621.80          16.50%               67.97%            59.84%         Increase 4.25 percentage points
air-conditioning
By product

Industrial product          3,357,438,836.06      2,690,266,141.68          19.87%               74.82%            67.86%         Increase 3.32 percentage points

Installation works          1,294,663,341.77      1,195,610,122.48          7.65%                50.93%            43.40%         Increase 4.85 percentage points

Others                           56,687,639.23       45,994,357.64          18.86%              125.62%            95.98%        Increase 12.27 percentage points

By region

Domestic sales              4,171,062,994.58      3,535,346,049.38          15.24%               58.99%            53.36%       Increase 3.11 percentage points

Foreign sales                   537,726,822.48      396,524,572.42          26.26%              198.87%           156.41%      Increase 12.21 percentage points

By sales model

Total                       4,708,789,817.06      3,931,870,621.80          16.50%               67.97%            59.84%         Increase 4.25 percentage points


(3)Was the Company's sales income on material objects more than that on labor service?
√ Yes □ No
                                                                                                                                      Year-on-year
            Industry category                       Item                          2023                        2022
                                                                                                                                    increase/decrease
                                        Sales volume                                     836,513                     125,863                    564.62%
Main refrigeration unit for
                                        Production output                                873,086                     125,675                    594.72%
industrial or commercial use
                                        Inventory level                                  108,409                      75,587                      43.42%

                                                                             13
    Reason for change in the related data by 30% or higher on a year-on-year basis
    √Applicable □ Not applicable
    The Company completed the acquisition of Sonyo Compressors and Sonyo Refrigeration System in November
    2022, and completed the acquisition of Sonyo Refrigeration in June 2023. During the reporting period, three
    subsidiaries of Panasonic were included in the statistical scope, and there were significant year-on-year changes in
    relevant data.

    (4)Performance of major sales contracts and major procurement contracts signed by the company up to
    the reporting period
     Applicable √ Not applicable
    (5)Sales cost structure
                                                          2023                                 2022
                                                                                                   Proportion to the      Year-on-year
  Industry category         Item                             Proportion to the
                                                 Amount                              Amount                             increase/decrease
                                                              operating costs                         operating costs
                   Direct materials      3,289,266,971.15             82.12% 2,205,570,125.13                 86.92%              49.13%
                   Labor wages             484,370,022.22             12.09%   208,996,790.95                  8.24%             131.76%
 Refrigeration and Depreciation             75,764,314.69              1.89%    33,450,400.07                  1.32%             126.50%
 air-conditioning Utilities                 31,810,562.98              0.79%    19,274,676.78                  0.76%              65.04%
                   Others                  124,385,587.16              3.11%    70,236,848.47                  2.77%              77.09%
                   Total operating costs 4,005,597,458.19            100.00% 2,537,528,841.40                100.00%              57.85%
    (6) Was the Company's consolidated range change during the reporting period?
     Applicable  Not applicable
    The entity included in the consolidated financial statements this year has increased by one compared to the
    previous year. During the reporting period, the Company acquired 40% equity of Panasonic Refrigeration (Dalian)
    Co., Ltd. ("Panasonic Refrigeration") held by Panasonic Electric (China) Co., Ltd; Acquired 60% equity of
    Panasonic Refrigeration held by Sanyo Electric Co., Ltd. After the completion of the equity transfer, the Company
    holds 100% equity of Panasonic Refrigeration and is included in the scope of consolidation.

    (7) Major change or adjustment in the Company's products or service in the reporting period
    □ Applicable √ Not applicable
    (8) Information on the Company's major customers and major suppliers
    Information on the Company's major customers
Total sales volume from top five customers (yuan)                                               567,585,617.15
Proportion of the total sales volume from top five customers to the annual sales volume                                            11.79%
Proportion of the related party total sales volume from top five customers to the annual sales volume                               3.72%

                                                                                                            Proportion to the annual
      No.                          Name of customer                              Sales volume (yuan)
                                                                                                                 sales volume
       1    Customer 1                                                                  179,269,129.59                             3.72%
       2    Customer 2                                                                  109,987,746.81                             2.28%
       3    Customer 3                                                                  101,383,384.54                             2.11%
       4    Customer 4                                                                   92,244,220.11                             1.92%
      5 Customer 5                                                                       84,701,136.10                             1.76%
     Total                                ——                                          567,585,617.15                            11.79%

    Information on the Company's top five customers
    Among the top five customers mentioned above, Customer 1 is related to the Company.

    Information on the Company's major suppliers
     Total purchase volume from top five suppliers (yuan)                                                                 432,966,587.81
     Proportion of the total purchase volume from top five suppliers to the annual purchases volume                               11.09%
     Proportion of the related party total purchase volume from top five suppliers to the annual purchases volume                  1.89%
                                                                     14
  Information on the Company's top five suppliers

                                                                                   Purchase             Proportion to the annual
    No.                            Name of supplier
                                                                                 volume (yuan)             purchase volume
      1     Supplier 1                                                              175,787,633.82                                4.50%
      2     Supplier 2                                                               73,737,385.70                                1.84%
      3     Supplier 3                                                               72,015,342.76                                1.22%
      4     Supplier 4                                                               63,809,032.17                                1.89%
    5    Supplier 5                                                      47,617,193.35                    1.63%
   Total                             ——                               432,966,587.81                   11.09%
  Among the top five suppliers mentioned above, Supplier 4 had an associated relationship with the Company.

  3. Expenses
                                                                Increase/decrease of gross
                           2023                 2022                                                   Explain for major changes
                                                               profit on a year-on-year basis
 Selling expenses        233,862,026.48      153,735,714.96                          52.12%
                                                                                                Due to changes in the scope of
 Administrative
                         245,326,181.11      186,378,204.50                          31.63% consolidation,         there   have      been
 expenses
                                                                                                significant year-on-year changes in
 Financial expenses       30,158,077.47        11,825,523.03                        155.03%
                                                                                                relevant data.
 R&D expenses            164,185,717.71        76,792,805.69                        113.80%
  4. R&D expenditure

  Information on R&D expenditure
                                                                                                   Increase/decrease on a year-on-year
                                                               2023                2022
                                                                                                                   basis
The quantity of the person engaged in R&D                                560              504                                      11.11%
The quantity proportion of the person engaged in R&D                  12.95%          14.18%              Decrease 1.23 percentage points
The spending amount on R&D(yuan)                        164,185,717.71        76,792,805.69                                     113.80%
R&D spending accounts for the proportion of revenue                   3.41%             2.65%             Increase 0.76 percentage points
The amount of R&D investment capitalization(yuan)                     0.00              0.00                                      0.00%
Capitalize R&D investment for the proportion of R&D
                                                                      0.00%             0.00%                                       0.00%
spending
  Reasons for the remarkable change in R&D spending accounts for the proportion of revenue compared with the
  previous year
  √ Applicable □Not applicable
  The Company completed the acquisition of Sonyo Compressors and Sonyo Refrigeration System in November
  2022, and completed the acquisition of Sonyo Refrigeration in June 2023. Due to changes in the scope of
  consolidation, there have been significant year-on-year changes in relevant data.
  Reasons for the substantial changes in the capitalization rate of R&D investment and its rationality
  □ Applicable √ Not applicable
  5. Cash flows

                                                                                                                     Year-on-year
                               Item                                       2023                     2022
                                                                                                                   increase/decrease
  Sub-total of cash inflows from operating activities                  4,269,130,191.69         2,419,852,020.16              76.42%
  Sub-total of cash outflows from operating activities                 4,293,570,859.43         2,476,099,319.52              73.40%
  Net amount of cash flow generated in operating
                                                                         -24,440,667.74           -56,247,299.36              56.55%
  activities
  Sub-total of cash inflows from investing activities                    46,010,527.14           419,938,843.20              -89.04%

                                                                 15
      Sub-total of cash outflows from investing activities               269,378,896.52        452,538,330.23              -40.47%
      Net amount of cash flow generated in investing
                                                                         -223,368,369.38       -32,599,487.03             -585.19%
      activities
      Sub-total of cash inflows from financing activities                451,319,569.70        871,841,047.27              -48.23%
      Sub-total of cash outflows from financing activities               454,362,447.06        301,774,629.30               50.56%
      Net amount of cash flow generated in financing
                                                                           -3,042,877.36       570,066,417.97             -100.53%
      activities
      Net increase in cash and cash equivalents                          -251,221,467.19       482,692,465.30             -152.05%

      Reason for change in the related data by 30% or higher on a year-on-year basis
      √ Applicable □ Not applicable
      1. The net cash flow generated from operating activities has significantly increased year-on-year, mainly due to an
      increase in sales orders and an improvement in payment collection.
      2. The net cash flow from investment activities decreased significantly year on year, mainly due to the impact of
      more cash received from investment income in the same period last year and the transfer of Sonyo Compressor
      into the subsidiary's fixed assets investment in the current period.
      3. The net cash flow generated from financing activities decreased significantly year-on-year, mainly due to the
      acquisition of large bank merger and acquisition loans in the same period last year.

      Reason for remarkable difference between the cash flows from the Company's operating activities in the reporting
      period and the net annual profit.
      □Applicable √ Not applicable

      V. Analysis of the non-main business
      □ Applicable √ Not applicable
      VI. Analysis of assets & liabilities
      1. Remarkable change in assets
                                                                                                        Monetary unit: RMB yuan
                              2023.12.31                     2022.12.31
                                                                                                                            Explain for
                                      Proportion to                  Proportion to         Proportion increase/decrease
                          Amount                         Amount                                                            major changes
                                     the total assets               the total assets
Monetary funds          951,039,570.11        11.65% 1,006,165,899.18          13.24% Decrease 1.59 percentage points
Accounts receivable    1,576,433,924.16      19.31% 1,409,978,442.95           18.55% Increase 0.76 percentage points
Contract assets         237,076,878.71         2.90%    225,790,875.78          2.97% Decrease 0.07 percentage points
Inventories            1,638,139,479.14      20.07% 1,395,344,780.24           18.36% Increase 1.71 percentage points
Investment property     123,589,681.50         1.51%    115,332,918.20          1.52% Decrease 0.01 percentage points
Long-term equity
                        521,274,947.50         6.39%    562,987,771.94          7.41% Decrease 1.02 percentage points
investment
Fixed assets           1,291,851,402.46      15.83% 1,229,029,368.93           16.17% Decrease 0.34 percentage points
Construction in
                        114,801,351.21         1.41%    115,577,902.54          1.52% Decrease 0.11 percentage points
progress
Use right assets         30,548,057.08         0.37%     30,941,662.26          0.41% Decrease 0.04 percentage points
Short-term loans        262,287,784.38         3.21%    274,052,990.15          3.61% Decrease 0.40 percentage points
Contract liabilities    787,685,294.53         9.65%    647,645,820.57          8.52% Increase 1.13 percentage points
Long-term loans         679,700,000.00         8.33%    715,100,000.00          9.41% Decrease 1.08 percentage points
Lease liabilities        24,134,986.97         0.30%     11,230,532.05          0.15% Increase 0.15 percentage points
      2. Assets & liabilities which are measured by fair value
      √ Applicable □ Not applicable
      Other non-current financial asset measured in fair value is 149,950,861.31 yuan at the year beginning,and
      164,024,771.63 yuan at the year end.
      Restrictions on asset rights as of the end of the reporting period
      By the end of reporting period, the Company’s asset rights 351,238,387.77 yuan was limited, the reason for the
      limitation: the deposit and the bank account were frozen; bank pledge; mortgage.
                                                                 16
     VII. Analysis of investments
     1.The overall situation
     √ Applicable □ Not applicable
                 Investment in 2023(yuan)                         Investment in 2022(yuan)                                   Amount of variation
                                      521,274,947.50                                          562,987,771.94                                                -7.41%


     2.The significant equity investment during the reporting period
     □Applicable √Not applicable
     3 The significant non-equity investment during the reporting period
     □Applicable √Not applicable

     4.The financial asset investment
     (1) The securities investment
     √ Applicable □ Not applicable
                                                                                           Accumula
                                         Account
                                                                      Changes in the          tive
                            Initial         ing
 Stock       Stock                                 Book value at the profit and loss of change of        Current sale    Report period Book value in the Accounting Source
                         investment      measure
 code    abbreviation                                 beginning       the fair value in    fair value      amount        profit and loss     ending          subjects     of funds
                             cost           ment
                                                                        this period        credited to
                                          model
                                                                                             equity

                                         fair                                                                                                                 Other

                                         value                                                                                                              Non-current    Own
601211 Guotai Jun’an    10,910,008.00               148,267,008.72     14,073,910.32            0.00               0.00 19,856,214.56     162,340,919.04
                                         measure                                                                                                             financial     funds

                                         ment                                                                                                                 assets

         total           10,910,008.00 --            148,267,008.72     14,073,910.32            0.00               0.00 19,856,214.56     162,340,919.04                    --

     Until 31 December, 2023, the Company held 10,910,008 numbers of shares of Guotai Jun’an Securities Co., Ltd..

     (2) Derivative investment
     □Applicable √ Not applicable
     During the reporting period, the Company does not exist derivative investment.
     5. The use of funds raised
     □Applicable √ Not applicable

     VIII. The material assets and equity sale
     1. The material assets sale
     □Applicable √Not applicable
     2. The material equity sale
     □Applicable √Not applicable

     IX. Analysis of major subsidiary companies and mutual shareholding companies
     √ Applicable □ Not applicable
     Unit: ten thousand yuan (except for registered capital)




                                                                                      17
                                                                                                   Operating
                                                      registered                                                Net profit
Company name        Type       The main business                     total assets   net assets      income
                                                         capital

                               Vending machine
                               development,
                               manufacturing,
                mutual
                               sales, installation, JPY 4,000
Fuji Bingshan   shareholding                                               47,017         13,752       20,985         -8,568
                               maintenance and      million
                company
                               related consulting
                               and after-sales
                               service
                               New building
                mutual
Jingxue                        energy-saving        RMB 108
                shareholding                                              181,548         83,170      115,210          3,802
Insulation                     board, refrigerated million
                company
                               storage door
                               High-grade
                mutual
                               building hardware, USD 18,064.5
Bingshan Metal shareholding                                                37,256         31,425       46,488          6,373
                               plumbing             thousand
                company
                               equipment
                               Manufacture and
                                                    RMB
Sonyo                          sales of gas
                subsidiary                          442.3967milli         176,400       116,224       133,019         11,743
Compressor                     compression
                                                    on
                               machinery
   Subsidiary companies obtained or disposed in the reporting period
   √Applicable □Not applicable
   The entity included in the consolidated financial statements this year has increased by one compared to the
   previous year. During the reporting period, the Company acquired 40% equity of Panasonic Refrigeration (Dalian)
   Co., Ltd. ("Panasonic Refrigeration") held by Panasonic Electric (China) Co., Ltd; Acquired 60% equity of
   Panasonic Refrigeration held by Sanyo Electric Co., Ltd. After the completion of the equity transfer, the Company
   holds 100% equity of Panasonic Refrigeration and is included in the scope of consolidation.

   X. The structured corporate bodies which the Company controlled
   □Applicable √Not applicable
   XI. Development prospect of the Company
   Major risks faced and countermeasures adopted by the Company
   (1)Increasing market competition risk
   Countermeasures: focus on the hot and cold industry, deeply cultivate the market segmentation; rapidly improve
   the engineering and manufacturing power; orderly improve the level of intelligent manufacturing and
   service-oriented manufacturing; speed up the transformation and upgrading of inherent undertakings; accelerate
   the implementation of new kinetic energy cultivation; continue to build Bingshan enterprise and interest
   community.

   (2)Risk of slow marketing of new products and technologies
   Countermeasures: create differentiated competitiveness of new products and technologies; strengthen the
   technology marketing and service marketing, and cultivate the market segmentation professionally; appropriate
                                                                    18
use of financial leasing, contract energy management and other innovative models.

(3)Risk of high level of trade receivables
Countermeasures: strictly implement the project management system and further strengthen the management of
accounts receivable; enhance quality of contract through intensified customer credit assessment and contract
appraisal; effective control of increase in trade receivables by reduction of guarantee deposits, and taking bank
credit instruments as guarantee deposits; improve contract execution through stricter review on goods delivery,
intensified control on project construction and acceptance, and post-sale service; prepare special composition
solutions and incentive policy to accelerate settlement of trade receivables with relatively long aging.

In 2024, the Company will focus on cold and hot business, further develop cold chain logistics, petrochemical
industry, ship refrigeration, ice and snow venues, CCUS, energy storage and heat management and other market
segments, solidly improve core competitiveness, effectively expand industry influence, continue to strengthen
main business, and strive to achieve rapid growth.

In 2024, the main business strategies are as follows:
(1) Sales force. Strengthen marketing planning and optimize incentive allocation. Consolidate traditional markets
and strengthen the exploration of new fields. Increase the proportion of self products and increase the gross profit
margin of the project.
(2) Product force. Guided by customer needs, accelerate the development of innovative products. Continuously
promote product standardization, serialization, and modularization. Integrate internal technical resources of the
Company and strengthen collaborative design and development.
(3) Technical force. Focusing on engineering technologies such as CO2 transcritical technology, environmental
simulation technology, cold and hot balance technology, and ultra-low charging system technology, we will
continue to optimize and improve them.
(4) Engineering force. Strengthen construction management to ensure project progress. Strengthen acceptance
management and promote orderly acceptance. Continuously carry out safety and quality improvement and
compliance inspections.
(5) Service force. Fully closed tracking and closed-loop management to improve customer satisfaction.
Continuously optimize business processes, improve service quality and efficiency.

The above-mentioned business plan does not represent the earnings forecast of the Company for the year of 2024.
Whether it can be achieved depends on the changes of market conditions and the efforts of management teams and
other factors. There are great uncertainties. Investors should pay special attention to it.

XII. Record of investigation, communication, and other activities in the reporting period
√Applicable □Not applicable
For details, please see
http://irm.cninfo.com.cn/ircs/company/companyDetail?stockcode=000530&orgId=gssz0000530




                                                        19
                                              Section 4 Corporate governance

        I. Basic situation of corporate governance

        Within the reporting period, the Company centered around the operation subject as “Leading innovation, Creating
        value” with the theme " integrity, innovation and return of the king"”, relying on the opportunity of overall
        relocation and transformation of the Company, to further deepen and perfect the normative internal control system
        and upgrade the governing level of the Company continuously.

        There were no problems with the Company concerning horizontal competition caused by restructures and other
        reasons. The main normal associated transactions between the Company and the associated companies included
        purchasing the supporting products for package projects from the associated companies, and selling the supporting
        parts and components to the associated companies and providing them with the labor service. Associated
        transactions between the Company and the associated companies are necessary for normal production and
        operation and helpful for the Company’s healthy development, and therefore will continue. The Company will
        strictly follow the related decision-making procedures and fulfill the obligation in information disclosure in order
        to further regulate associated transactions.
        Was there any deviation of the Company's corporate governance from the requirements in the Company Law and
        China Securities Regulatory Commission's regulations?
        □ Yes √ No
        There was no deviation of the Company's corporate governance from the requirements in the Company Law and
        China Securities Regulatory Commission's regulations.

        II. Status of the Company's business, staff, asset, organization and finance separations from
        the holding shareholder

        The Company was separated from the holding shareholder in business, staff, asset, organization and finance, and
        has the independent and complete business and operation capability.

        III. Horizontal competitions
        □ Applicable √ Not applicable

        IV Shareholders’ general meeting convened in the reporting period

        1. Annual Shareholders’ general meeting within this reporting period
                                                                           The proportion of
             Session number of meeting          The type of the meeting         participate              date           Disclosing date Disclosing index
                                                                                investors
   2022                                  Annual Shareholders’ general                                                                       http://www.cnin
                                                                                       29.44% May 25, 2023             May 26, 2023
   Annual Shareholders’ General Meeting meeting                                                                                             fo.com.cn


        V. Information on the Company’s Directors, Supervisors, Senior Management and Staff

        1. basic information

                                                                                               Shares           Increase on          Decrease in
                                                                                                                                                       Shares held
                                                                     Starting     Ending       held at           holding of           holding of
                                         Office-hol                                                                                                    at the end of
    Name                 Position                     Sex   Age      date of      date of     beginning         shares in this       shares in this
                                         ding state                                                                                                       period
                                                                   office term office term of period               period               period
                                                                                                                                                         (shares)
                                                                                              (shares)            (shares)              (share)
Ji Zhijian        Chairman               Incumbent    M      56      Mar.27,      Jan.11,     1,528,830                          0                 0     1,528,830

                                                                          20
                                                               2014      2025
                                                              Jan.12,   Jan.11,
Fan Wen        Director                Incumbent   M   59                            7,770              0             0          7,770
                                                               2022      2025
                                         leave                Jan.12,   Apr.9,
Yin Xide       Vice Chairman                       M   52                           90,080              0             0         90,080
                                         office                2022      2024
                                                              Jan.12,   Jan.11,
Song Wenbao Director                   Incumbent   M   50                          593,880              0             0        593,880
                                                               2022      2025
                                         leave                Jan.12,   Apr.9,
Dono Shigeru Director                              M   62                                0              0             0             0
                                         office                2022      2024
Nishimoto      Director                Incumbent   M          Jun.5,    Jan.11,
                                                       57                                0              0             0             0
Shigeyuki                                                      2019      2025
                                                   M         May.14,    Jan.11,
Zhai Yunling   Independent director    Incumbent       60                                0              0             0             0
                                                               2021      2025
                                                             May.14,    Jan.11,
Liu Yuanyuan Independent director      Incumbent   F   49                                0              0             0             0
                                                               2021      2025
                                       Incumbent   F         May.14,    Jan.11,
Yao Hong       Independent director                    50                                0              0             0             0
                                                               2021      2025
               Chairman of the board                          Jan.17,   Jan.11,
Hu Xitang                              Incumbent   M   56                                0              0             0             0
               of Supervisors                                  2019      2025
                                                              Jan.21,   Jan.11,
Dai Yuling     Supervisor              Incumbent   F   46                                0              0             0             0
                                                               2016      2025
                                                             May.15,    Jan.11,
Li Sheng       Supervisor              Incumbent   M   44                                0              0             0             0
                                                               2020      2025
                                                              Jan.1,    Jan.11,
Cai Liyong     General manager         Incumbent   M   50                                0              0             0             0
                                                               2024      2025
               Deputy general                                 Jan.12,   Jan.11,
Lu Jun                                 Incumbent   M   58                            2,500              0             0          2,500
               manager                                         2022      2025
               Deputy general                                 Jan.12,   Jan.11,
Yang Fuhua                             Incumbent   M   52                                0              0             0             0
               manager                                         2022      2025
               Chief Financial                               May.14,    Jan.11,
Wang Jinxiu                            Incumbent   F   53                            5,000              0             0          5,000
               Officer                                         2021      2025
                                                              Feb.5,    Jan.11,
Song Wenbao Board secretary            Incumbent   M   50                                 -              -            -              -
                                                               2013      2025
                                         leave                Jan.1,     Jan.1,
Yin Xide       General manager                     M   52                                 -              -            -              -
                                         office                2021      2024
Total                                                                             2,228,060             0             0   2,228,060
         During the reporting period, whether any directors or supervisors leave office or senior
         managers are dismissed
         √Applicable □Not applicable
         The Company held the 18th meeting of the 9th Board of Directors on November 23, 2023, and approved the report
         on the dismissal and appointment of the Company's General Manager. Dismiss Mr. Yin Xide from his position as
         General Manager of the Company according to the development needs of the Company; Upon nomination by the
         Chairman of the Company, Mr. Cai Liyong has been appointed as the General Manager of the Company. His
         official dismissal and appointment date is January 1, 2024, and his term of office expires on the expiration of the
                                                                 21
    9th Board of Directors of the Company.

    Changes of directors, supervisors, senior managers of the Company

     Name          Position held               Type                  Date                                  Reason

   Yin Xide      General Manager            Dismissal             Jan 1,2024                  Company development needs
  Cai Liyong     General Manager           Appointment            Jan 1,2024                  Company development needs
   Yin Xide       Vice Chairman             Leave office          Apr 9,2024                Resignation due to job changes
Dono Shigeru         Director               Leave office          Apr 9,2024                Resignation due to job changes

    Office holding

    Professional background, main work experiences and the main duties and responsibilities of incumbent directors,
    supervisors, senior managers of the Company
                                                                                                                                 main duties and
     Name      Position held Professional background                              Main work experience
                                                                                                                                 responsibilities
                              doctorate degree in
                                                           Successively acting as GM, Chairman of Panasonic Cold-Chain.;             Related
                              management of the
Ji Zhijian      Chairman                                   Chairman and President of Dalian Bingshan Group Co., Ltd.; responsibilities of
                              Dalian University of
                                                           Chairman of the Company.                                               the Chairman
                              Technology
                                                           served as vice Minister of Import and Export Department and
                                                                                                                                     Related
                                                           Minister of Import and Export Department of the Company; Assistant
Fan Wen          Director     Graduate degree                                                                                   responsibilities of
                                                           general Manager and Vice President of DalianBingshan Group Co.,
                                                                                                                                   the Director
                                                           LTD.; Director of Jiangsu JingXue Insulation Technology Co.,Ltd.
               Director and                                                                                                          Related
                              graduate from Zhejiang Successively acting as representative for securities affairs, board
Song Wenbao       Board                                                                                                         responsibilities of
                              University,CFA              secretary of the Company.
                Secretary                                                                                                       Board Secretary
                                                           served as the director of Financial Planning Room and Finance
                                                           Department System Overall Room of Panasonic Corporation                   Related
Nishimoto                     graduated from Meiji
                 Director                                  Headquarter; the director of Regional Financial Integration Room, responsibilities of
Shigeyuki                     university
                                                           CFO of Panasonic Corporation China & Northeast Asia Company; the        the Director
                                                           supervisor of Dalian Bingshan Group Co., LTD.
                                                           Professor of Law School of Dalian Maritime University, lawyer of          Related
               Independent Doctor of Law,                  Beijing Jincheng Tongda (Dalian) Law Firm, legal adviser of Dalian responsibilities of
Zhai Yunling
                 director     professor, lawyer            Municipal People's Government, member/arbitrator of Dalian the Independent
                                                           Arbitration Commission                                                    director
                                                           Professor of Accounting School of Dongbei University of Finance
                                                           and Economics, Director of Sino-German Management Control                 Related
               Independent                                 Research Center, independent director of China Railway Tielong responsibilities of
Liu Yuanyuan                  Doctor of Accounting
                 director                                  Container Logistics Co., LTD.,; independent director of Bank of the Independent
                                                           Dalian Co., LTD.; independent director of Kincai (Liaoning) Life          director
                                                           Science and Technology Co., LTD.
Yao Hong       Independent graduate from China             Doctor of Management, School of Economics and Management,                 Related

                                                                      22
                  director     University of Political      Dalian University of Technology, Independent director of Shanghai responsibilities of
                               Science and Law,            Binku Network Technology Co., LTD., Independent director of Hualu the Independent
                               professor of law             Zhida Technology Co., LTD., Independent director of Harbin Hattou            director
                                                            Investment Co., LTD., Independent director of Fushun Special Steel
                                                            Co., Ltd.
               Chairman of graduated from Nanjing                                                                                        Related
Hu Xitang        Board of      University of Science        served as the chairman of the labor union of the Company.               responsibilities of
                Supervisors and Technology                                                                                            the Supervisor
                                                                                                                                         Related
                                                            acting as the chief of the Financial Dept. of Dalian Bingshan Group
Dai Yuling      Supervisor     Senior Accountant                                                                                    responsibilities of
                                                            Company Ltd.
                                                                                                                                      the Supervisor
                               graduated from Dalian        acting as the Director of Operation Management Department of                 Related
Li Sheng        Supervisor     University of                Dalian Bingshan Group Company Ltd;chief of the Financial Dept. of responsibilities of
                               Technology                   the Company.                                                              the Supervisor
                               Heilongjiang University
                                                            served as the General Manager of Dalian Bingshan Ryosetsu Quick
                               of Commerce (now
                                                            Freezing Equipment Co., Ltd., the General Manager of Wuhan New               Related
                               renamed Harbin
Cai Liyong         GM                                       World Refrigeration Industry Co., Ltd., and the General Manager of responsibilities of
                               University of
                                                            Bingshan Sonyo Refrigeration (Dalian) Co., Ltd. Starting from January          GM
                               Commerce) majoring in
                                                            1, 2024, appointed as the General Manager of the Company.
                               refrigeration and freezing
                                                            served as designer and vice minister of the Company; general Manager
                               graduated from Jilin
                                                            of Dalian Bingshan Air-conditioning Equipment Co., Ltd; the Deputy           Related
                               University of
Lu Jun            DGM                                       General Manager of Dalian Bingshan Group Engineering Co., LTD. ; responsibilities of
                               Technology, Graduate
                                                            the assistant to the general Manager and head of the Operation and            DGM
                               degree, Senior Engineer.
                                                            Management Department of the Company.
                                                            served as engineer, deputy director and director of complete set
                               graduated from Xi 'an        design Department of the Company; served as deputy General                   Related
Yang Fuhua        DGM          Jiaotong University,         Manager of Dalian Bingshan Group Engineering Co., LTD; served as responsibilities of
                               Senior Engineer              chief engineer of the Company's business Headquarters and deputy              DGM
                                                            Head of the Research and development Headquarters.
                                                            served as cost accountant in finance Department of the Company and
                                                            Minister of Finance Department of DalianBingshan Air Conditioning            Related
Wang Jinxiu        CFO         Senior accountant            Equipment Co., LTD.; served as the Director of the Financial responsibilities of
                                                            Management Department of the Company. served as Chief Financial               CFO
                                                            Officer since May 2021.


   Office holding in shareholder unit
   √ Applicable □ Not applicable
                                                                                                     If receiving remuneration or allowance from
Name of office holder        Shareholder unit name              Position held in shareholder unit
                                                                                                                   shareholder unit
Ji Zhijian              Dalian Bingshan Group Co., Ltd. Chairman of the Board, President                                 Yes
Fan Wen                 Dalian Bingshan Group Co., Ltd. Vice President                                                   Yes



                                                                        23
Office holding in other units
√ Applicable □ Not applicable
                                                                                                                       If receiving
                                                                                                                     remuneration or
    name                                       unit name                             Position held in other unit
                                                                                                                   allowance from other
                                                                                                                           unit
                  Dalian Zhong Huida Refrigeration Technology Co., Ltd.                        Chairman                    No
  Ji Zhijian
                  Linde Engineering (Dalian) Co., Ltd.                                         Chairman                    No
                  Sonyo Compressor (Dalian) Co., Ltd.                                          Chairman                    No
                  Dalian Bingshan Air-Conditioning Equipment Co., Ltd                          Chairman                    No
                  Dalian Niweisi LengNuan Technology Co., Ltd                                  Chairman                    No
   Fan Wen
                  Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd                   Chairman                    No
                  MHI Bingshan Refrigeration (Dalian) Co., Ltd.                                Chairman                    No
                  Dalian Bingshan Engineering & Trading Co., Ltd.                              Chairman                    No
                  Wuhan New World Refrigeration Industrial Co., Ltd.                           Chairman                    No
                  Sonyo Refrigeration (Dalian) Co., Ltd.                                       Chairman                    No
 Cai Liyong
                  Sonyo Refrigeration System (Dalian) Co., Ltd.                                Chairman                    No
                  Dalian Bingshan Group Construction Co., Ltd                                  Chairman                    No
                  China Railway Tielong Container Logistics Co., LTD.                     Independent director             Yes
Liu Yuanyuan
                  Kincai (Liaoning) Life Science and Technology Co., LTD.                 Independent director             Yes
                  Harbin Hattou Investment Co., LTD.                                      Independent director             Yes
Yao Hong
                  Fushun Special Steel Co. LTD                                            Independent director             Yes
3. Remuneration paid to directors, supervisors, and senior management
Decision-making procedure, decision-making basis and actual payment of remuneration for directors, supervisors
and senior management
Decision-making procedure: the Company's remuneration plan for directors and supervisors was proposed by the
Company's Remuneration and Evaluation Committee of the Board of Directors, and after approval by the Board
of Directors, submitted to the general meeting for adoption and put into effect. The Company’s remuneration plan
for senior management was put into effect after approval by the Company’s Board of Directors.
Decision-making basis: it was decided on the basis of main responsibilities and importance of the concerned
position and the remuneration level of similar positions in other similar enterprises and evaluated and rewarded
through the Company’s examination procedure for assets operation performance.
The total amount of remunerations actually ( pre-tax ) paid by the Company to directors, supervisors, and senior
management was 5,033,700 yuan.

      Particulars about the annual remuneration of directors, supervisors and senior staff members
                                          Annual remuneration and allowance( pre-tax )paid by the Company
                  Name
                                                                    (ten thousand yuan)
     Ji Zhijian                                                               0
     Yin Xide                                                               107.88
     Yokoo Sadaaki                                                            0
     Nishimoto Shigeyuki                                                      0
     Song Wenbao                                                            64.73
     Zhai Yunling                                                             8
     Liu Yuanyuan                                                             8
     Yao Hong                                                                 8

                                                                  24
     Hu Xitang                                                    80.34
     Dai Yuling                                                     0
     Li Sheng                                                     35.61
     Lu Jun                                                       64.27
     Yang Fuhua                                                   63.53
     Wang Jinxiu                                                  63.01
     Total                                                        503.37


VI. Performance of directors' duties during the reporting period
1.The situation of the board of Directors during this reporting period
                The meeting time                Date of meeting      Date of disclosure       The meeting resolution

13th Meeting of 9th Session of the Board   April 25,2023            April 26,2023         http://www.cninfo.com.cn

14th Meeting of 9th Session of the Board   May 4,2023               May 5,2023            http://www.cninfo.com.cn

15th Meeting of 9th Session of the Board   June 27,2023             June 28,2023          http://www.cninfo.com.cn

16th Meeting of 9th Session of the Board   August 25,2023           August 26,2023        http://www.cninfo.com.cn

17th Meeting of 9th Session of the Board   October 26,2023          October 27,2023       http://www.cninfo.com.cn

18th Meeting of 9th Session of the Board   November 23,2023         November 24,2023      http://www.cninfo.com.cn

2. Attendance of directors at the board of directors and general meetings of shareholders
During the reporting period, all directors were present in person at all board meetings where they were required to
be present.
3.Objections raised by directors to matters related to the company
□ Applicable √ Not applicable
4. Other instructions for the performance of directors' duties
□ Applicable √ Not applicable
VII. Execution of duties of the special committees under the Board of Directors in the
reporting period
The audit committee under the Board of Directors of the Company performs its duties in accordance with the
detailed rules for the implementation of the audit committee under the Board of Directors and the working
procedures for the annual report of the audit committee, supervises the Company's internal audit system and its
implementation, reviews the Company's financial information and its disclosure, and evaluates the work of
external audit institutions.
In the evaluation of the Company's internal control, the audit committee actively plays its responsibilities of
organization, leadership and supervision. According to the identification standard of internal control defects of the
Company, the annual internal control evaluation report of the Company was reviewed, and ShineWing Certified
Public Accountants was entrusted to conduct internal control audit. It is considered that the current situation of the
Company's internal control system meets the relevant requirements and has been well implemented. The annual
internal control evaluation report of the Company truthfully reflects the above facts.
During the annual audit of the company, the audit committee actively communicated and effectively coordinated
with the audit institution ShineWing certified public accountants. Before and after the audit, we have repeatedly
urged the audit institutions to promote the audit work with quality and quantity on the audit work plan and work
progress. After the completion of the audit, the annual financial report and annual report of the company were
carefully reviewed, and it was considered that the financial report of the company was comprehensive and true,
and the financial report and other information disclosed by the company were objective and true, which truly
                                                            25
reflected the annual financial situation of the company.
The Audit Committee believes that ShineWing Certified Public Accountants can abide by the independent,
objective and fair practice standards in providing annual audit services for the Company, audit the Company in
strict accordance with the new accounting standards, actively communicate with the audit committee and
independent directors, be diligent and responsible, and better complete the annual audit of the Company.
The remuneration and assessment committee under the Board of Directors of the Company performed its duties in
accordance with the implementation rules of the remuneration and assessment committee of the Board of
Directors of the Company, and reviewed the annual remuneration of the directors, supervisors and senior
managers of the Company.

VIII. Work of the Board of Supervisors
Was there any risk with the Company found by the Board of Supervisors in their supervision activities in the
reporting period?
□ Applicable √ Not applicable
The Board of Supervisors had no objections to the matters under supervision in the reporting period.
IX Status of the Company's staff
1. As of Dec. 31, 2023 the Company and its subsidiary had 4,323 enrolled employees, including 2,451 persons
engaged in production; 567 persons engaged in marketing; 560 persons engaged in engineering and technology;
78 persons engaged in financing; and 667 persons engaged in management.
2. As of Dec. 31, 2023, among enrolled employees of the Company and its subsidiary, 145 persons have the
educational background of Master or higher; 1,336 persons have the educational background of university; 1,332
persons have the educational background of junior college; and 1,510 persons have the educational background of
secondary technical school or lower.
3. The Company applied the employee job performance wage system with distribution according to positions and
performance of an employee.
4. The Company formulated the annual training plan and gave purposeful training to an employee in consideration
of his/her post requirement.
5. Labor outsourcing
□ Applicable √ Not applicable
X. Profit distribution and dividend payment
By giving consideration to both the return to shareholders and the Company's long-term development, and in
combination of the Company's profit made in this year, the Company formulated the 2021 annual dividend
distribution plan of paying the cash of 0.1 yuan for every 10 shares. Reviewed and adopted at the Company's
general meeting, the Company's Board of Directors has implemented the plan in July 2023.
Formulation and implementation of the Company's cash dividend distribution policy in the reporting period
complied with the Company's Articles of Association and the general meeting's resolution, and the dividend
distribution standard and proportion were defined and clear and the applicable decision-making procedure and
system were complete. The independent directors agreed on it and the legal rights and interests of minority
shareholders were well protected.
                                   Special notes to cash dividend payout policy
If the regulations of the Articles of Association or the requirements of the shareholders of
                                                                                                    Yes
the company meeting are met:
If the dividend payout standard and proportion is definite and clear-cut:                           Yes
If relevant decision-making procedure and mechanism is complete:                                    Yes
If the independent directors have performed their duties and played their due role:                 Yes
If small and medium shareholders have the opportunity to sufficiently express their
                                                                                                    Yes
opinions and appeals and if their legal rights and interests are sufficiently protected:
If the condition and procedure for adjusting or changing the cash dividend payout policy
                                                                                                    Yes
is compliant and transparent:

The Company made profit in the reporting period and the undistributed profit of the parent company was positive
                                                          26
but no cash dividend distribution plan was proposed.
□ Applicable √ Not applicable
Profit distribution preplan, and preplan of share-granting with capital accumulation fund of the Company
Bonus shares to be presented for every 10 shares (shares)                                                                                0
Dividend to be distributed for every 10 shares (RMB yuan) (including tax)                                                               0.3
Equity base for distribution preplan (shares)                                                                                  843,212,507
Total amount of cash dividend distribution (RMB yuan) (including tax)                                                        25,296,375.21
Profit distributable to the shareholders in the current year                                                               1,022,296,513.94
Proportion of cash dividend distribution accounting for total profit distribution                                                    100%
                                                    Cash dividend distribution policy:
When the development stage of the company belongs to a growth period with important fund disbursement arrangement(s), the
proportion of cash dividend distribution accounting for this profit distribution should reach 20% at minimum when conducting profit
distribution.
                   Notes to details about preplan for profit distribution or capital stock increase with capital reserve

According to the audit by ShineWing CPAs (Special General Partnership), the net profit made by the parent company of the Company
in 2023 was RMB 104.265 million and 10% of the net profit(RMB 10.426 million) was drawn as the legal surplus reserve. Therefore,
the profit distributable to the shareholders in the current year was RMB 93.839 million.
Plus the initial undistributed profit of RMB 936.889 million and minus the dividend of RMB 8.432 million of common shares paid in
2022,the accumulated profit distributable to the shareholders was RMB1, 022.296 million.
The Company’s profit distribution preplan for 2023:
Based on the net profit made by the parent Company of the Company in 2023 (104.265 million), 20% of the net profit (RMB 20.853
million) will be drawn as the free surplus reserve; Based on the total capital stock of 843,212,507 shares, the dividend of RMB 0.3 in
cash (including tax) will be distributed for every 10 shares, the total cash dividend is RMB 25.296 million, and the cash dividend for
B share is converted and paid in Hong Kong dollars.
The above preplan shall be submitted to the 2023 shareholders’ general meeting for review and approval.
XI.The implementation and effect of equity incentive
□ Applicable √ Not applicable
XII.Internal control system construction and implementation during the reporting period
1. Internal control construction and implementation
During the reporting period, the Company made positive innovation, took the initiative to change, and vigorously
promoted organizational strengthening. Implement market-centered integrated operation through organizational
restructuring, business process reengineering and management system revision. Through the project management
system, fully implement the project budget, control the whole process of operation, ensure profits and prevent
risks.
2. Details of material weakness in the internal control found in the reporting period described in the report
on self-evaluation of internal control.
□ Applicable √ Not applicable
There was no material weakness in the internal control found in the reporting period.
XIII.Management and control of subsidiaries during the reporting period
During the reporting period, the Company focused on strengthening the management control of subsidiaries from
the following aspects:
(1) The Company carefully identified, strictly managed and dynamically adjusted the directors, supervisors and
senior managers assigned to subsidiaries;
(2) The Company participated in the whole process of the preparation of the annual business plan of its
subsidiaries, made reasonable suggestions and gave appropriate guidance;
(3) The Company conducted monthly/quarterly tracking and annual assessment on the implementation of business
                                                                   27
plans and compliance operations of subsidiaries.
During the reporting period, in order to further strengthen the main business of cooling and heating, the Company
acquired 100% equity of Panasonic Refrigeration after a major asset restructuring in 2022. The integration plan
for the aforementioned restructuring in terms of business, assets, finance, personnel, institutions, etc. is detailed in
the Company's "Draft Report on Major Asset Purchase and Related Party Transactions (Revised Draft)". The
relevant integration plan is being implemented in an orderly manner.

XIV.Report on self-evaluation of internal control or internal control audit report
1. Report on self-evaluation of internal control
    Details of material weakness in the internal control found in the reporting period described in the report on
                                          self-evaluation of internal control
There was no material weakness in the internal control found in the reporting period.
Date of disclosing the full text of the report on
                                                  Apr.26, 2024
self-evaluation of internal control
Disclosure reference to the full text of the      For the 2023 annual report on self-evaluation of internal control
report on self-evaluation of internal control     of the Company, visit the website www.cninfo.com.cn.

2. Internal control audit report
                     Description of the deliberation opinions in the internal control audit report
We think that as of Dec. 31, 2023, Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. had
maintained an effective internal control over the financial reports in all material aspects according to Basic
Enterprise Internal Control Specification and relevant regulations.
Date of disclosing the full text of
                                      Apr. 26, 2024
the internal control audit report
Disclosure reference to the full text For the 2023 annual internal control audit report of the Company, visit the
of the internal control audit report website www.cninfo.com.cn.
Did the accounting firm issue the internal control audit report with nonstandard opinions?
□ Applicable √ Not applicable
Was the internal control audit report issued by the accounting firm consistent with the opinion in the
self-evaluation report of the Board of Directors?
√Yes □ No
XV. Rectification of problems in self inspection of special actions for governance of listed
companies
None




                                                          28
                 Section 5 Environmental and social responsibility
I.Major environmental issues

The listed company and its subsidiaries whether belong to heavy pollution industry formulated by the state
environmental protection department
√Yes □ No
Bingshan Sonyo Compressor (Dalian) Co., Ltd., and Wuhan New World Refrigeration Industry Co., Ltd,
subsidiaries of the Company, are key pollutant discharge units announced by the environmental protection
department.
Administrative penalties imposed for environmental problems during the reporting period
□Yes √ No

II.Social responsibilities
The specific content of the Company's performance of social responsibility can be found in the Social
Responsibility Report disclosed on Juchao information website on April 26, 2024.

III. We consolidated and expanded our achievements in poverty alleviation and rural revitalization
In 2023, the Company continued to consolidate and expand the achievements of poverty alleviation and rural
revitalization, and invested 60,000 yuan in the construction of a rural street lighting project to connect and
communicate with Songlin Village, Guangming Mountain Town, Zhuanghe City. The Company also carried out
daily maintenance of the air conditioning equipment in the village cultural activity center. In addition, the Dalian
Jinpu New Area Bingshan Hope Middle School and Bingshan Hope Book Corner, jointly funded by the Company
and investing enterprises with 250,000 yuan, were unveiled on December 28, 2023.




                                                        29
                                    Section 6 Important items
I   Implementation of commitments
1. Commitments of the Company or its shareholders holding 5% or higher of the shares in the reporting
period or carried to the reporting period
√Applicable □Not applicable
According to the relevant provisions of the "Self regulatory Guidelines for Listed Companies on the Shenzhen
Stock Exchange No. 8- Major Asset Restructuring", the important commitments and performance made by
relevant parties during the 2022 major asset restructuring process of the Company are detailed in the Company's
announcement on the performance of commitments made by relevant parties during the major asset restructuring
disclosed on CNINFO on April 26, 2024.

2. The company's assets or projects have earnings forecasts, and the reporting period is still in the period of
earnings forecasts. The company explains the reasons why the assets or projects have reached the original
earnings forecasts.
□Applicable √Not applicable
II. Non-operation capital occupation by holding shareholders and their related parties in the
listed company
□Applicable √Not applicable
The Company had no capital occupation by the holding shareholders and their related parties in the listed
company within this reporting period.
III. Foreign guarantee in violation of regulations
□ Applicable √ Not applicable
IV. Explain to the “non standard audit report” last year from the board of directors of the
Company
□Applicable √Not applicable
V. Explain to the “non standard audit report” from the board of directors, board of
supervisors of the Company
□Applicable √Not applicable
VI. Change in accounting policies, accounting estimates and accounting methods or correction
of major accounting mistakes in the reporting period, which should be retroactively restated
compared with the financial statements of the previous year
√Applicable □Not applicable
On November 30, 2022, the Ministry of Finance issued Interpretation No. 16 of the Accounting Standards for
Enterprises, which stipulates that "deferred income tax related to assets and liabilities arising from individual
transactions shall not be subject to the accounting treatment of initial recognition exemption" and shall come into
effect from January 1, 2023.
Due to the release of the above accounting standards interpretation, the Company needs to make corresponding
changes to accounting policies and implement the above accounting standards from the effective date specified in
the above documents.
The Company implemented the relevant provisions of Accounting Standard Interpretation No. 16 from January 1,
2023, and made retrospective adjustments to the relevant items of the consolidated financial statements for the
year 2022.

VII. Change in the range of consolidated statements compared with the financial statements
of the previous year
√Applicable □Not applicable
The entity included in the consolidated financial statements this year has increased by one compared to the
previous year. During the reporting period, the Company acquired 40% equity of Panasonic Refrigeration (Dalian)
Co., Ltd. ("Panasonic Refrigeration") held by Panasonic Electric (China) Co., Ltd; Acquired 60% equity of
Panasonic Refrigeration held by Sanyo Electric Co., Ltd. After the completion of the equity transfer, the Company
holds 100% equity of Panasonic Refrigeration and is included in the scope of consolidation.


                                                        30
 VIII. Engagement and dismissal of the accounting firm
 Currently engaged accounting firm
Name of domestic accounting firm                                          ShineWing CPAs (Special General Partnership)
Remuneration paid to the domestic accounting firm (in 10 thousand yuan)                        107
Continuous audit service years of the domestic accounting firm                                  8
Name of certified public accountants with the domestic accounting firm            Sui Guojun, Zhang Shizhuo
Continuous audit service years of the certified public accountants          Sui Guojun 1 year, Zhang Shizhuo 3 years
 If the CPA firm retaining was changed in this period
 □Applicable √Not applicable
 Employment of internal control audit accounting firm, financial advisor or sponsor
 √ Applicable □ Not applicable
 During the reporting period, the Company hired ShineWing CPAs (Special General Partnership) as the Company's
 2023 audit institution to conduct an integrated audit of the Company's financial reports and internal control.
 IX. Facing suspend and terminate listing after the annual report disclosure
 □ Applicable √ Not applicable
 X. Bankruptcy restructuring related matters
 □ Applicable √ Not applicable
 XI. Major lawsuit and arbitration issues
 □ Applicable √ Not applicable
 XII. Punishment and rectification
 □ Applicable √ Not applicable
 XIII.The credibility of companies and its controlling shareholder, actual controller
 √ Applicable □ Not applicable
 The controlling shareholder of the Company and the Company don’t exist situation such as unfulfilled the court’s
 effective judgments or failed to pay duly a large amount of debt during the reporting period.
 XIV.Important associated transactions
 1. Related party transactions related to daily operations
 During the reporting period, the total amount of normal associated transactions between the Company and
 associated parties was 784.78 million yuan, accounting for 94.71% of the budgeted amount for the year 2023. This
 included 207.66 million yuan, accounting for 80.64% of the budgeted amount for the year 2023, for purchasing
 supporting products for package projects from associated parties, and 577.12 million yuan, accounting for
 101.05% of the budgeted amount for the year 2023, from selling supporting parts and components to associated
 parties.

 Associated transactions related to purchases or sales of assets
 □Applicable √ Not applicable
 Important associated transactions with joint external investments
 □ Applicable √ Not applicable
 4. Associated transactions related to rights and debts
 □ Applicable √ Not applicable
 5. Associated transactions with related financial companies
 □ Applicable √ Not applicable
 6. The transactions between the financial company controlled by the company and its related parties
 □ Applicable √ Not applicable
 7. Other associated transactions
 √ Applicable □ Not applicable
 In order to strengthen business collaboration and provide more optimized solutions for energy conservation and
 environmental protection for customers, the Company signed a conditional and effective equity transfer agreement
 with Panasonic China and Sanyo Electric on May 4, 2023, acquiring 40% equity of Panasonic Refrigeration held
 by Panasonic China and 60% equity of Panasonic Refrigeration held by Sanyo Electric. The equity transfer was
 completed in June 2023, and the Company holds 100% equity in Panasonic Refrigeration.




                                                                31
XVII. Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2)the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
The 13th meeting of the 7th board of directors of the Company was held on April 22, 2017, and approved to rent
out the old plant and land located in No 888, South West RD, Shahekou Districit, Dalian to Bingshan Wisdom.
The lease contract is from April 1, 2017 to December 31, 2036. The Company has signed the “estate leasing
contract” with Dalian Bingshan Wisdom based on the requirement of utilization of old land and plant and new
business foster plan. Current year’s lease premium is RMB 9.01 million.
On July 31, 2014, the Company and Lingzhong Bingshan Refrigeration (Dalian) Co., Ltd. signed a supplementary
agreement to modify the house lease contract, and rent out the Building No. 6 of Workshop No. 106, Liaohe East
Road, Dalian Development Zone, to Lingzhong Bingshan Refrigeration (Dalian) Co., Ltd.. The rental area is
15,259.04 square meters, and lease period will end on July 16, 2029, the annual rent is RMB 3.81 million.
2. Guaranteeing status
√Applicable □ Not applicable
China Development Fund provides support for the Company's cold chain green intelligent equipment and service
industrialization base project, and provides special funds to the controlling shareholder of the Company, Bingshan
Group. The above-mentioned special fund amount is 160 million yuan, with a term of 10 years and a rate of 1.2%.
After the above special funds are in place, Bingshan Group has fully allocated them to the Company in a one-time
manner without increasing the rate. The implementation of the above-mentioned special funds requires the
Company to provide guarantees and continue until the reporting period. This guarantee is in the form of a
guarantee for the controlling shareholder, but in fact, it is a guarantee for the Company to obtain financial support
for itself.
The Company provides guarantees for clients Guizhou Waterfall Cold Chain Food Investment Co., Ltd., Liuyang
Zhongjie Technology Investment Co., Ltd., Shandong Jiechuang Energy Technology Co., Ltd., and Shaanxi
Yiming Food Co., Ltd. based on financing leasing business, which will continue until the reporting period. In the
normal performance of the above-mentioned project, the guaranteed shareholder and relevant natural persons
provided the company with full joint and several liability guarantee and counter guarantee, and the overall
guarantee risk of the Company is controllable.
The Company provides guarantees to its client Jilin Fuyu Agricultural Technology Co., Ltd. based on financing
leasing business. The guarantor has good qualifications, and the guarantor's shareholders and related natural or
legal persons have provided the company with full joint liability guarantee and counter guarantee. The overall risk
of the Company's guarantee is controllable, and it has not harmed the legitimate rights and interests of the
company and small and medium-sized shareholders.
The above guarantee matters have been reviewed by the board of directors and are being fulfilled normally.

3. Entrust others to cash assets management
(1)Trust management
□Applicable √Not applicable
(2)Entrusted loans
□Applicable √Not applicable
(3)Other important contracts
□ Applicable √ Not applicable
                                                         32
XIX. Other important matters
□ Applicable √ Not applicable

XX. Other important matters of subsidiary company
□ Applicable √ Not applicable




                                          33
    Section 7 Change in Share Capital and Shareholders' Information
I. Change in share capital
1. Change in share capital
                                                                           Shares                                    Shares
                                                                      (before change)                        (after change)
                         items
                                                                number           proportion             number                     proportion
I. Non-circulating share capital with restricted trade
                                                                  1,670,894               0.20%                1,670,894                 0.20%
conditions
II. Circulating share capital                                   841,541,613            99.80%             841,541,613                   99.80%
1. Domestically listed ordinary shares                          600,041,613            71.16%             600,041,613                   71.16%
2. Domestically listed foreign shares                           241,500,000            29.64%             241,500,000                   29.64%
III. Total shares                                               843,212,507           100.00%             843,212,507                  100.00%


Approval of changes in shares
□ Applicable √Not applicable
The restricted shares changes
□ Applicable √Not applicable
II. Securities issuance and listing
1. Securities issuance in the report period
□ Applicable √ Not applicable
2. Change in total shares of the Company and structure of shareholders
□ Applicable √ Not applicable
3. Internal staff shares
□ Applicable √ Not applicable

III. Shareholders and actual controller
1. Number of shareholders and their shareholding
Total number of shareholders in the                         Total number of shareholders as of the last month before
                                              48,029                                                                                     53,903
reporting period                                            disclosure of the annual report
                                                       Shareholding of top ten shareholders
                                                                                                                Number of           Number of
                                                                                    Proporti                    shares with           pledged
                       Name                                      Nature                        Total number
                                                                                      on                            sale             shares or
                                                                                                                 restriction       shares frozen
                                                       Domestic non-state-owned
Dalian Bingshan Group Co., Ltd.                                                      20.27% 170,916,934                        0                 0
                                                       legal person
Sanyo Electric Co., Ltd.                               Overseas legal person          8.72%       73,503,150                   0                 0
Everyone's Assets - Shengshi Selected No.2
                                                       Others                         1.29%       10,847,212
Collective Asset Management Product (Phase 2)
Chen Xianlai                                           Domestic natural person        0.87%        7,326,500
Lin Zhenming                                           Foreign natural person         0.80%        6,730,000
Cao Yifan                                              Domestic natural person        0.54%        4,529,700
J. P. Morgan Securities PLC-own funds                 Overseas legal person          0.52%        4,361,703
Zhang Sufen                                            Domestic natural person        0.48%        4,020,000

                                                                      34
Dongfanghong JD Big Data Flexible Allocation
                                             Others                                  0.47%       4,000,017
Hybrid Securities Investment Fund
Xue Hong                                             Domestic natural person         0.43%       3,640,000

                                       Shareholding of top ten shareholders without sale restriction
                                                                             Number of shares
                                 Name                                                                           Type of shares
                                                                          without sale restriction
Dalian Bingshan Group Co., Ltd.                                                      170,916,934 RMB denominated ordinary shares
Sanyo Electric Co., Ltd.                                                                 73,503,150    Domestically listed foreign shares
Everyone's Assets - Shengshi Selected No.2 Collective Asset
                                                                                         10,847,212 RMB denominated ordinary shares
Management Product (Phase 2)
Chen Xianlai                                                                              7,326,500 RMB denominated ordinary shares
Lin Zhenming                                                                              6,730,000    Domestically listed foreign shares
Cao Yifan                                                                                 4,529,700    Domestically listed foreign shares
J. P. Morgan Securities PLC-own funds                                                    4,361,703 RMB denominated ordinary shares
Zhang Sufen                                                                               4,020,000 RMB denominated ordinary shares
Dongfanghong JD Big Data Flexible Allocation Hybrid Securities
                                                                                          4,000,017 RMB denominated ordinary shares
Investment Fund
Xue Hong                                                                                  3,640,000    Domestically listed foreign shares

                                                                         Dalian Bingshan Group Co., Ltd. had the association

Notes to the associated relationship and uniform actions of the above relationship with Sanyo Electric Co., Ltd. among the above
                             shareholders                             shareholders. Sanyo Electric Co., Ltd. holds 26.6% of Dalian
                                                                         Bingshan Group Co., Ltd.'s equity.




 Explanation on the participation of the top 10 ordinary shareholders
                                                                         None
            in margin trading and securities lending business




2. Controlling shareholder of the Company

                                             Legal         Founding     Unified social
    Name of holding shareholder                                                                            Main business
                                         representative      date        credit code
                                                                                   Research, development, manufacture, sales,
                                                                                   service and installation of industrial refrigeration
                                                                                   products, freezing and cold storage products,
                                                                       91210200241 large-, medium- and small-size air-conditioning
Dalian Bingshan Group Co., Ltd.         Ji Zhijian        Jul. 3, 1985
                                                                       2917931     products, petrochemical equipment products,
                                                                                   electronic and electric control products, home
                                                                                   appliance products and environment protection
                                                                                   products.
Shares held by the holding
shareholder in other overseas and
domestic listed companies as the        None
holding shareholder or ordinary
shareholder in the reporting period

Change in the holding shareholder in the reporting period
□ Applicable √ Not applicable


                                                                   35
                                              3. Actual controller of the Company
                                              The company has no actual controller.
                                              According to the actual situation of the Company and its controlling shareholder, and compared with the related
                                              laws and regulations including Company Law of People’s Republic of China, Management Regulation on Listing
                                              Company Acquisition and Stock Listing Rules of Shenzhen Stock Exchange, with the confirmation of Liaoning
                                              Huaxia law firm, the Company released the Public Notice on Not Having Actual Controller.(No: 2015-025),)
                                              which was published on B04 of China Securities, A19 of HK Commercial Daily and Cninfo website on April 24
                                              2015.
Commission ofDalian Municipality Government

                                               State-owned Assets Supervision and Administration




                                                                                                                                                                        Dalian State-owned Assets Management Co., Ltd.
                                                                                                                   Dalian Equipment Manufacture Investment




                                                                                                                                                                                                                                                                                                                                                            Panasonic Corporation of China
                                                                                                                                                                                                                                                                                Dalan Zhonghuida Refrigeration




                                                                                                                                                                                                                                                                                                                         Sanyo Electric Co., Ltd.
                                                                                                                                                                                                                              Dayang Co., Ltd.




                                                                                                                                                                                                                                                         Technology Co., Ltd.
                                                                                                       Co., Ltd.




                                              100%                                                          100%




                                                                                                   24.97%                                                       8.28%                                                    13.3%                        20.2%                                                      26.6%                              6.65%




                                                                                                                                                                          Dalian Bingshan Group Co., Ltd.


                                                                                                                                                                                                                         20.27%

                                                                                                                                                             Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd.

                                              The actual controller controlled the Company through a trust or other asset management
                                              □ Applicable √ Not applicable

                                              4. Other legal-person shareholders holding of 10% or more shares
                                              □ Applicable √ Not applicable
                                              5.、controlling shareholders, actual controllers, restructuring the constraint to the stake and other
                                              commitments underweight
                                              □ Applicable √ Not applicable




                                                                                                                                                                                                                                                 36
                       Section 8 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.




                                                        37
                         Section 9 Information on Corporate bonds
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own corporate bonds.




                                                          38
                                  Section 10 Financial Report


 1.   Opinion

 We have audited the accompanying financial statements of Bingshan Refrigeration & Heat Transfer
 Technologies Co., Ltd (“Bingshan Refrigeration & Heat Company”), which comprise the consolidated
 and company balance sheets as at 31 December 2023, and the consolidated and company income
 statements, the consolidated and company cash flow statements, the consolidated and company
 statements of changes in equity for the year then ended, and notes to these financial statements.

 In our opinion, the accompanying financial statements have been prepared in accordance with the
 requirements of Accounting Standards for Business Enterprises, in all material respects and present fairly
 the consolidated and the financial position of Bingshan Refrigeration & Heat Company as at 31
 December 2023, and of their consolidated and the company’s financial performance and cash flows for
 the year then ended.

 2.   Basis for Opinion

 We conducted our audit in accordance with China Standards on Auditing for Chinese Certified Public
 Accountants. Our responsibilities under those standards are further described in the “Auditor’s
 Responsibilities for the Audit of the Financial Statements” section of our report. We are independent of
 Bingshan Refrigeration & Heat Company in accordance with the Code of Ethics for Chinese Certified
 Public Accountants, and we have fulfilled our other ethical responsibilities of the code. We believe that
 the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit.

 3.   Key Audit Matters

 Key audit matters are those matters that we consider, in our professional judgment, were of most
 significance in our audit of the financial statements of the current period. These matters were addressed
 in the context of our audit of the financial statements as a whole and, in forming our audit opinion
 thereon, and we do not express a separate opinion on these matters.


Revenue Recognition
Key Audit Matter                       How the matter was addressed in the audit
As stated in the Note ‘ No.44,VI.     The main audit procedures carried out for addressing the key audit
Notes to Consolidated Financial        matters are as follows:
Statements’, revenue on the           1. Understand and evaluate effectiveness of design and operation
                                       of the management’s internal control over revenue
consolidated statements for the year
                                       2. Carried out analytical review and evaluate the reasonableness of
ended as of December 31, 2023, is
                                       sales income and gross profit margin by segmenting the business and
4,815.9415 million Yuan. Revenue       sales in conjunction with industry development and actual situation
of Bingshan Refrigeration & Heat
                                                     39
Company     and    its   subsidiaries   of Bingshan Refrigeration & Heat Company.
mainly come from sales of products      3. Sampling test the sales contracts, identify the clause and
and installation project. We consider   condition in respect to the contract performance obligation,
                                        consideration and risk and reward transfer of the ownership.
the revenue as the key audit matter,
                                        Evaluate the revenue recognition of Bingshan Refrigeration & Heat
because of the significance of
                                        Company whether it is in line with the accounting standards.
revenue to the overall financial        4. Sampling select product sales revenue record, reconcile to sales
statements, and also the inherent       invoice, contracts, dispatch note, acceptance note; Sampling select
risk of revenue manipulation by the     installation sales revenue record, reconcile to invoice, installation
management so for the special           contracts and completion report and Evaluate the recognition of
purpose.                                revenue whether is in line with the accounting standards
                                        5. Checking actual installation cost by reviewing the contract
                                        budget, contract, invoice and supportive document with signature for
                                        the equipment received to evaluate the cost whether it really
                                        incurred.
                                        6. Combined with receivable audit, perform confirmation
                                        procedures for key clients
                                        7. Perform cut-off test so to ensure whether the transaction is
                                        recorded into the appropriate accounting period.

 4.   Other Information

 The management of Bingshan Refrigeration & Heat Company (hereinafter referred to as the
 “Management”) is responsible for the other information. The other information comprises the
 information included in the Bingshan Refrigeration & Heat Company 2023 annual report, but does not
 include the financial statements and our auditor’s report thereon.

 Our opinion on the financial statements does not cover the other information and we do not express any
 form of assurance conclusion thereon.

 In connection with our audit of the financial statements, our responsibility is to read the other information
 and, in doing so, consider whether the other information is materially inconsistent with the financial
 statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

 If, based on the work we have performed, we conclude that there is a material misstatement of the other
 information, we are required to report that fact. We have nothing to report in this regard.

  5. Responsibilities of the Management and Those Charged with Governance for the Financial
Statements

 The Management is responsible for the preparation of the financial statements in accordance with
 Accounting Standards for Business Enterprises to achieve fair presentation; and designing, implementing
 and maintaining internal control which is necessary to enable that the financial statements are free from
 material misstatement, whether due to fraud or error.


                                                      40
In preparing the financial statements, the Management is responsible for assessing Bingshan
Refrigeration & Heat Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the Management either
intends to liquidate Bingshan Refrigeration & Heat Company or to cease operations, or have no realistic
alternative but to do so.

Those charged with governance are responsible to overseeing Bingshan Refrigeration & Heat Company’s
financial reporting process.

6.   Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are generally considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.

During the course of audit in accordance with auditing standards, we exercise professional judgment and
maintain professional skepticism. We also carry out the following works:

(1) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our audit. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of its internal control (this sentence would be deleted in circumstance when we are also
responsible to issue an opinion on the effectiveness of internal control in conjunction with the audit of the
financial statements).

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Management.

(4) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on Bingshan Refrigeration & Heat Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements in accordance with
the auditing standards or, if such disclosures are inadequate, we shall modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
                                                     41
future events or conditions may cause Bingshan Refrigeration & Heat Company to cease to continue as a
going concern.

(5) Evaluate the overall presentation, structure and content of the financial statements, and also
whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.

(6) Obtain sufficient and appropriate audit evidence with respect to the financial information of
Bingshan Refrigeration & Heat entities or business activities, and issue an audit opinion. We are
responsible for guiding, supervising and performing group audits and take full responsibility for audit
opinions.

We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings etc., including any significant deficiencies in
internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with those
relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence and related safeguards,
where applicable.

From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
prohibited public disclosure about the matter or when, in rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.


ShineWing Certified Public Accountants( LLP)   CPA:Sui Guojun      (Engagement Partner)



                                               CPA:Zhang Shizhuo




                 China, Beijing                April 24, 2024




                                                    42
                                                    Consolidated Balance Sheet
                Name of Enterprise:Bingshan Refrigeration   & Heat Transfer Technologies   Co., Ltd    Amount Unit:RMB


                                     ITEMS                                     31 December 2023               01 January 2023

Current Assets:

  Monetary funds                                                                       951,039,570.11               1,006,165,899.18

  Settlement provision

  Loans to banks and other financial institutions

  Financial asset held for trading

  Derivative financial assets

  Notes receivable                                                                    353,428,922.42                  505,945,261.18

  Accounts receivable                                                                1,576,433,924.16               1,409,978,442.95

  Receivable financing                                                                303,585,218.53                   58,792,792.70

  Prepayments                                                                         153,388,660.48                  171,991,468.12

  Insurance receivables

  Reinsurance Receivable

  ProVsion of reinsurance contract reserve receivable

  Other receivables                                                                     41,396,223.27                  51,394,474.24

       including: interest receivable

                          diVdend receivable                                                14,495.00                       14,495.00

  Financial assets purchased under agreement to resell

  Inventories                                                                        1,638,139,479.14               1,395,344,780.24

  Contractual asset                                                                   237,076,878.71                  225,790,875.78

  Held for sale assets

  Non-current assets due within 1-year                                                                                 15,715,631.52

  Other current assets                                                                  26,074,342.33                  33,499,577.60

                           Total Current Assets                                      5,280,563,219.15               4,874,619,203.51

Non-Current Assets:

  Loan and payment on other's behalf disbursed

  Debt investment

  Other debt investment

  Long-term receivables                                                                                                   5,162,458.90

  Long-term equity investment                                                         521,274,947.50                  562,987,771.94

  Other equity instrument investment

  Other non-current financial assets                                                  164,024,771.63                  149,950,861.31

  Investments properties                                                              123,589,681.50                  115,332,918.20


                                                                   43
  Fixed assets                                                                      1,291,851,402.46                 1,229,029,368.93

  Construction in process                                                            114,801,351.21                    115,577,902.54

  Production biological assets

  Oil-gas assets

  Right-of-use assets                                                                 30,548,057.08                     30,941,662.26

  Intangible assets                                                                  210,554,161.22                    168,076,720.07

  Development cost

  Goodwill                                                                           286,402,171.93                    248,345,508.41

  Long-term prepaid expense                                                             5,346,321.60                     6,486,566.92

  Deferred tax asset                                                                 113,648,859.53                     95,424,386.61

  Other non-current assets                                                            20,243,349.44

                        Total Non-current Assets                                    2,882,285,075.10                 2,727,316,126.09

                                 Total Assets                                       8,162,848,294.25                 7,601,935,329.60

legal representative:Ji Zhijian head of the accounting work:Wang Jinxiuthe person in charge of the accounting office:Li Sheng




                                                                 44
                                                 Consolidated Balance Sheet (continued)
  Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd Amount Unit:RMB
                                      ITEMS                                    31 December 2023            01 January 2023
Current Liabilities:
   Short-term borrowings                                                                  262,287,784.38        274,052,990.15
   Loans from central bank
   Loans from other banks
   Financial liability held for trading
   Derivative financial liabilities
   Notes payable                                                                          670,720,999.48        618,944,384.85
   Accounts payable                                                                   1,655,835,363.01        1,586,098,060.59
   Advance received
   Contractual liability                                                                  787,685,294.53        647,645,820.57
   Financial assets sold under agreements to repurchase
   Deposits received and hold for others
   Entrusted trading of securities
   Entrusted underwriting of securities
   Employee pay payables                                                                  149,497,113.46        118,216,683.23
   Taxes and duties payable                                                                22,216,492.26         33,691,523.62
   Other payables                                                                         278,804,152.17         67,054,250.25
   including: interest payable
               dividend payable                                                              533,156.00             533,156.00
   Fees and commissions payable
   Amount due to reinsurance
   Held for sale liabilities
   Non-current liabilities due within 1-year                                              150,645,347.64         63,105,954.56
   Other current liabilities                                                              203,315,864.43        204,650,003.24
                             Total Current Liabilities                                4,181,008,411.36        3,613,459,671.06
Non-current Liabilities:
   Insurance contract provision
   Long-term borrowings                                                                   679,700,000.00        715,100,000.00
   Bonds Payable
           including: preference share
                       perpetual debt
   Lease liability                                                                         24,134,986.97         11,230,532.05
   Long-term payables                                                                      10,331,937.30         31,009,644.16
   Long-term employee payables
   Provision                                                                                4,544,802.88         18,805,967.43
   Deferred income                                                                         98,274,267.80         99,754,346.39
   Deferred Tax liabilities                                                                60,811,462.07         52,384,532.28
   Other non-current liabilities
                           Total Non-current Liabilities                                  877,797,457.02        928,285,022.31

                                 Total Liabilities                                    5,058,805,868.38        4,541,744,693.37
Owners Equity(or Shareholders Equity):
                                                                    45
 Paid-in capital(Share capital)                                                             843,212,507.00              843,212,507.00
 Other equity instrument
    Including:preference share
                perpetual capital securities
 Capital reserve                                                                             717,097,098.38              717,097,098.38
 Less: Treasury stock
 Other comprehensive income                                                                    2,208,669.73                 2,208,669.73
 Chartered reserve                                                                               449,374.96
 Surplus reserves                                                                            867,159,439.34              825,222,039.39
△Provision for general risk
  Undistributed profit                                                                       617,386,488.34              618,380,112.53
                Equity attributable to equity holders of the Company                       3,047,513,577.75            3,006,120,427.03
 *Minority interest                                                                           56,528,848.12               54,070,209.20

                                Total Equity                                               3,104,042,425.87            3,060,190,636.23
                         Total Liabilities and Equity                                      8,162,848,294.25            7,601,935,329.60
 legal representative:Ji Zhijian head of the accounting work:Wang Jinxiuthe person in charge of the accounting office:Li Sheng




                                                                       46
                                          Balance Sheet of Parent Company
   Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd      Amount Unit:RMB

                              ITEMS                             31 December 2023           01 January 2023

Current Assets:

   Monetary funds                                                       177,430,880.63             361,446,559.26

   Tradable financial asset

   Derivative financial assets

   Notes receivable                                                      64,984,113.98             100,218,283.64

   Accounts receivable                                                  612,933,182.91             629,954,649.50

   Receivable     financing                                              13,562,917.97              12,451,483.74

   Prepayments                                                           62,988,427.81              61,446,678.23

   Other receivables                                                    138,883,665.74              36,021,805.53

         including: interest receivable

                        dividend receivable                             110,000,000.00

   Inventories                                                          394,763,078.40             342,276,945.65

   Contractual assets                                                   106,401,142.42              83,739,043.68

   Held for sale assets

   Non-current assets due within 1-year                                                             15,715,631.52

   Other current assets                                                   3,046,484.01                 565,836.48

                      Total Current Assets                            1,574,993,893.87           1,643,836,917.23

Non-Current Assets:

   Debt investment

   Other debt investment

   Long-term receivables                                                                             5,162,458.90

   Long-term equity investment                                        2,930,381,144.87           2,720,998,153.80

   Other equity instrument investment

   Other non-current financial assets                                   162,709,629.13             148,635,718.81

   Investments properties                                                86,587,170.43              90,986,890.03

   Fixed assets                                                         632,491,373.17             646,432,825.98

   Construction in process                                               42,867,809.00              48,905,875.93

   Production biological assets

   Oil-gas assets

   Right-of-use assets                                                   13,360,039.29              14,975,625.90

                                                           47
       Intangible assets                                                            68,437,853.58                      72,158,994.17

       Development cost

       Goodwill

       Long-term unamortized expense                                                 4,434,379.95                       5,553,733.11

       Deferred tax asset                                                           27,809,290.39                      21,597,992.46

       Other non-current assets

                        Total Non-current Assets                                  3,969,078,689.81                  3,775,408,269.09

                               Total Assets                                       5,544,072,583.68                  5,419,245,186.32
 legal representative:Ji Zhijian head of the accounting work:Wang Jinxiu the person in charge of the accounting office:Li Sheng




                                          Balance Sheet of Parent Company (continued)
         Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies       Co., Ltd            Amount Unit:RMB
                               ITEMS                                      31 December 2023                   01 January 2023

Current Liabilities:

   Short-term borrowings                                                           219,000,000.00                      234,980,000.00

   Financial liability held for trading

   Derivative financial liabilities
   Notes payable                                                                   172,920,936.32                      259,002,815.07

   Accounts payable                                                                418,383,161.14                      406,794,291.57

   Advance received

   Contractual liability                                                           108,021,877.17                      139,622,706.08

   Employee pay payables                                                            12,109,637.82                        14,557,783.63

   Taxes and duties payable                                                          3,523,630.66                         9,430,543.11

   Other payables                                                                  174,010,076.60                        21,061,597.80

   including: interest payable

                dividend payable                                                       533,156.00                           533,156.00

   Held for sale liabilities

   Non-current liabilities due within 1-year                                       134,539,973.21                        42,972,752.44

   Other current liabilities                                                        69,349,185.65                      106,146,986.20

                     Total Current Liabilities                                   1,311,858,478.57                    1,234,569,475.90

Non-current Liabilities:

   Long-term borrowings                                                            679,700,000.00                      715,100,000.00

   Bonds Payable

            including: preference share

                     perpetual debt

   Lease liability                                                                  10,878,947.77                        12,613,986.87

   Long-term payables                                                                                                    12,908,810.87

                                                                     48
   Long-term employee payables

   Provision for liabilities

   Deferred income                                                                  61,369,767.80                       61,685,846.39

   Deferred Tax liabilities                                                         22,714,636.67                       20,649,497.74

   Other non-current liabilities

                Total Non-current Liabilities                                     774,663,352.24                       822,958,141.87

                        Total Liabilities                                       2,086,521,830.81                     2,057,527,617.77

Owners Equity(or Shareholders Equity):

   Paid-in capital(Share capital)                                                843,212,507.00                       843,212,507.00

   Other equity instrument

      Including:preference share

                 perpetual capital securities

   Capital reserve                                                                755,146,592.54                       755,146,592.54

   Less: Treasury stock

   Other comprehensive income                                                        1,246,569.06                         1,246,569.06

   Chartered reserve
   Surplus reserves                                                               867,159,439.34                       825,222,039.39

   Undistributed profit                                                           990,785,644.93                       936,889,860.56

                          Total Equity                                          3,457,550,752.87                     3,361,717,568.55

                 Total Liabilities and Equity                                    5,544,072,583.68                      5,419,245,186.32
 legal representative:Ji Zhijian head of the accounting work:Wang Jinxiuthe person in charge of the accounting office:Li Sheng




                                                                    49
                                                      Consolidated Income Statement
 Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd             Amount Unit:RMB
                                         Item                                         Current year          Last year
Ⅰ、Total operating revenue                                                           4,815,941,467.70      2,893,085,310.29
 Including: Operating revenue                                                         4,815,941,467.70      2,893,085,310.29
 Interest income
 Earned premiums
 Fees and commission income
Ⅱ、Total cost of operation                                                           4,718,340,202.43      2,988,322,715.94
 Including: Cost of operation                                                         4,005,597,458.19      2,537,528,841.40
 Interest expenses
 Fees and commission expenses
 Payments to surrenders of insurance contracts
 Net amount of insurance claims expenses
 Net charges of provision for insurance contracts
 Dividends policy expenses
 Reinsurance expenses
 Taxes and surcharges                                                                    33,968,677.08           22,061,626.36
 Selling and distribution expenses                                                      233,862,026.48          153,735,714.96
 Administrative expenses                                                                250,568,245.50          186,378,204.50
 R&D                                                                                    164,185,717.71           76,792,805.69
 Financial expenses                                                                      30,158,077.47           11,825,523.03
 Including: Interest expenses                                                            37,918,133.57           18,581,726.78
                     Interest income                                                     10,558,433.14            5,850,062.80
 add: other income                                                                       30,179,668.51            7,173,155.47
 investment income (Loss listed with "-")                                                 1,106,628.72          306,688,497.94
 Including: income from investments in associates and joint ventures                     -4,884,731.99          -37,218,861.27
 Gain arising from derecognition of financial asset measuredat amortized
cost
 Exchange gain (Loss listed with "-")
 Gain on hedging of net exposure (Loss listed with "-")
 Gain on FV change (Loss listed with "-")                                                14,073,910.32          -46,991,034.40
 Loss on impairment of credit(Loss listed with "-")                                     -69,732,055.75          -82,695,388.75
 Loss on impairment of assets(Loss listed with "-")                                     -14,405,692.66          -74,825,795.00
 Gain on asset disposal(Loss listed with "-")                                            -1,184,930.14             194,556.13
Ⅲ、Operating profit (Loss listed with "-")                                              57,638,794.27           14,306,585.74
 Add: Non-operating income                                                               14,533,922.09           11,841,528.55
 Less: Non-operating expenses                                                             6,966,477.53            5,204,540.35
Ⅳ、 Total profit (Loss listed with "-")                                                 65,206,238.83           20,943,573.94
 Less: Income tax expenses                                                               11,031,699.08             576,816.28
Ⅴ、Net profit (Net loss listed with "-")                                                54,174,539.75           20,366,757.66
 (I) Classification by continuity                                                        54,174,539.75           20,366,757.66
 1、Net profit from continuing operation                                                 54,174,539.75           20,366,757.66
 2、Net profit from discontinuing operation
 (II) Classification by ownership                                                        54,174,539.75           20,366,757.66
 1、Net profit attributable to equity holders(shareholders) of the Company               49,375,900.83           18,731,969.48
 2、Minority interest                                                                     4,798,638.92            1,634,788.18

                                                                   50
Ⅵ、 Other comprehensive income net off tax                                                                                 29,988.00
            Net other comprehensive income net off tax attributable to equity
                                                                                                                            29,988.00
holders(shareholders) of the parent company
 (Ⅰ)Items that may not be reclassified subsequently to the income statement
 1.Change in net asset/liability from remeasurment on defined benefit plan
  2.Under equity method, proportionate share of other comprehensive
income in invested company that may not be reclassified subsequently to
 3.FV change of other equity instrument investment
 4.FV change of own credit risk
 5.Others
 (Ⅱ)Items that may be reclassified subsequently to the income statement                                                    29,988.00
 1.Under equity method, proportionate share of other comprehensive income
invested company that may be reclassified subsequently to the income statement                                              29,988.00

 2.FV change of other debt instrument investment
 3.Financial assets reclassfied into other comprehensive income
 4.Credit impairment provision of other debt investment

 5.Cash flow hedges effective portion

 6.Foreign currency translation difference
 7.Others
 Net other comprehensive income net off tax attributable to Minority interest
Ⅶ、Total comprehensive income                                                               54,174,539.75              20,396,745.66
 Total comprehensive income attributable to parent Company                                   49,375,900.83              18,761,957.48
 Total comprehensive income attributable to minority interest                                 4,798,638.92               1,634,788.18
Ⅷ、 Earnings per share
 (Ⅰ)Basic earnings per share                                                                          0.06                          0.02
 (Ⅱ)Diluted earnings per share                                                                        0.06                          0.02

     legal representative:Ji Zhijian head of the accounting work:Wang Jinxiuthe person in charge of the accounting office:Li Sheng




                                                                     51
                                               Income Statement of Parent Company
                  Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies   Co., LtAmount Unit:RMB

                                       Item                                           Current year                   Last year

Ⅰ、Operating revenue                                                                       1,147,567,097.70         1,048,142,993.33

Less: Cost of operation                                                                       949,400,269.07           909,850,529.59

       Taxes and surcharges                                                                   12,915,605.84            12,305,882.57

       Selling and distribution expenses                                                      58,418,856.46            54,927,585.49

       Administrative expenses                                                                83,623,829.67            92,850,447.59

       R&D                                                                                    34,643,670.44            28,982,093.78

       Financial expenses                                                                     30,961,451.10            12,093,600.10

              Including: Interest expenses                                                    30,060,509.49            12,261,980.25

                            Interest income                                                     928,862.25              2,557,312.33

Add: Other income                                                                             13,476,491.91             1,983,356.24

       Investment income (Loss listed with "-")                                               137,165,248.86           289,868,640.72

         Including: income from investments in associates and joint ventures                  -5,506,787.08             -37,651,689.22
                        Gain arising from derecognition of financial asset
                       measured at amortized
cost
        Gain on hedging of net exposure (Loss listed with "-")

        Gain on FV change (Loss listed with "-")                                              14,073,910.32             -46,991,034.40

        Loss on impairment of credit(Loss listed with "-")                                   -26,975,462.06             -27,779,271.62

        Loss on impairment of assets(Loss listed with "-")                                   -15,398,757.36             -13,966,272.08

        Gain on asset disposal(Loss listed with "-")                                             25,669.74                 84,294.67

Ⅱ、Operating profit (Loss listed with "-")                                                   99,970,516.53            140,332,567.74

   Add: Non-operating income                                                                           -                   49,394.31

  Less: Non-operating expenses                                                                  451,394.65                 61,252.08

Ⅲ、 Total profit (Loss listed with "-")                                                      99,519,121.88            140,320,709.97

          Less: Income tax expenses                                                           -4,746,187.51             -17,258,852.19

Ⅳ、Net profit (Net loss listed with "-")                                                     104,265,309.39           157,579,562.16

       1、Net profit from continuing operation                                                104,265,309.39           157,579,562.16

       2、Net profit from discontinuing operation

Ⅴ、 Other comprehensive income net off tax                                                                                29,988.00

   (Ⅰ)Items that may not be reclassified subsequently to the income statement

   1.Change in net asset/liability from remeasurment on defined benefit plan
    2.Under equity method, proportionate share of other comprehensive
income in invested company that may not be reclassified subsequently to the
income statement
   3.FV change of other equity instrument investment
                                                                      52
   4.FV change of own credit risk

   5.Others

   (Ⅱ)Items that may be reclassified subsequently to the income statement                                                        29,988.00

   1.Under equity method, proportionate share of other comprehensive income
                                                                                                                                  29,988.00
invested company that may be reclassified subsequently to the income statement

   2.FV change of other debt instrument investment

   3.Financial assets reclassfied into other comprehensive income

   4.Credit impairment provision of other debt investment

   5.Cash flow hedges effective portion

   6.Foreign currency translation difference

   7.Others

Ⅵ、Total comprehensive income                                                                   104,265,309.39             157,609,550.16
  legal representative:Ji Zhijian head of the accounting work:Wang Jinxiuthe person in charge of the accounting office:Li Sheng




                                                                     53
                                                 Consolidated Cash Flow Statement

                  Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies    Co., LtAmount Unit:RMB
                                        Item                                          Current year                Last year
1. Cash flows from operating activities:
   Cash received from sales of goods and rendering of services                          4,113,893,219.72          2,299,565,737.92
   Net increase in deposits from customers and inter-banks deposits
   Net increase in loans from central bank
   Net increase in loans from other financial institutions
   Cash receipts of premium of direct insurance contracts
   Net cash received from reinsurance contracts
   Net increase in deposits from insurance policy holders and investment
  Cash receipts of interest, fees and commission
  Net increase in placement from banks and other financial institution
  Net increase in sales and repurchase operations
  Entrusted trading of securities
  Cash received from taxes refund                                                            28,408,313.78             27,845,766.93
  Cash received relating to other operating activities                                      126,828,658.19             92,440,515.31
               Sub-total of cash inflows from operating activities                      4,269,130,191.69          2,419,852,020.16
   Cash paid for goods and services                                                     3,076,384,953.42          1,765,774,138.68
   Net increase in loans and disbursement to customers
   Net increase in deposit with central bank and inter-banks
   Cash paid for claims of direct insurance contracts
   Net increase of loans to other banks
   Cash paid for interest, fee and commission
   Cash paid for dividends of insurance policies
   Cash paid to and on behalf of employees                                                  735,972,826.45            392,733,128.51
   Payments of taxes and surcharges                                                         190,790,155.61             85,488,578.90
   Cash paid relating to other operating activities                                         290,422,923.95            232,103,473.43
              Sub-total of cash outflows from operating activities                      4,293,570,859.43          2,476,099,319.52
      Net cash flows from operating activities                                               -24,440,667.74           -56,247,299.36
2. Cash flows from investment activities:
     Cash received from return of investments                                                                         304,791,101.68
     Cash received from investments income                                                   44,342,521.09            109,215,313.16
    Net cash received from disposal of fixed assets, intangible assets and other               1,668,006.05              668,334.46
   long-term assets
     Net cash received from disposal of subsidiaries and other business units                                           5,264,093.90
     Cash received relating to other investing activities
               Sub-total of cash inflows from investing activities                           46,010,527.14            419,938,843.20
    Cash paid to acquire fixed assets, intangible assets and other long-term assets          89,321,945.50             50,713,747.56
     Cash paid for investments
     Net increase in pledged deposits
     Net cash paid to acquire subsidiaries and other business units                          12,056,951.02            401,824,582.67
     Cash paid relating to other investing activities                                       168,000,000.00
               Sub-total of cash outflow from investing activities                          269,378,896.52            452,538,330.23
      Net cash flows from investing activities                                              -223,368,369.38           -32,599,487.03
3. Cash flows from financing activities
     Cash received from investment absorption

                                                                        54
     Including: Cash received by subsidiaries from investment absorpotion of
    non-controlling interest
     Cash received from loans granted                                                         385,643,636.90               847,850,000.00
     Cash received relating to other financing activities                                      65,675,932.80                23,991,047.27
               Sub-total of cash inflows from financing activities                            451,319,569.70               871,841,047.27
     Cash paid   for settlement of borrowings                                                 341,900,000.00               242,005,111.11
     Cash paid for dividends, profits appropriation or payments of interest                    41,772,038.58                30,640,401.33
     Including: Dividens and profits paid to non-controlling interest
     Cash paid relating to other financing activities                                          70,690,408.48                29,129,116.86
              Sub-total of cash outflows from financing activities                            454,362,447.06               301,774,629.30
      Net cash flows from financing activities                                                  -3,042,877.36              570,066,417.97
  4. Effect of changes in foreign exchange rate on cash and cash equivalents                      -369,552.71                 1,472,833.72
5. Net increase in cash and cash equivalents                                                 -251,221,467.19               482,692,465.30
   Add: Cash and cash equivalents at beginning of year                                        921,661,803.17               438,969,337.87
6. Cash and cash equivalents at end of year                                                    670,440,335.98                921,661,803.17
   legal representative:Ji Zhijian head of the accounting work:Wang Jinxiuthe person in charge of the accounting office:Li Sheng




                                                                        55
                                         Cash Flow Statement of Parent Company
                       Name of Enterprise: Bingshan Refrigeration & Heat Transfer Technologies   Co., Ltd   Amount   Unit :RMB


                                                 Item                                                          Current year         Last year

1.Cash flow from operating activities

   Cash receipts from sale of goods or rendering of services                                                   1,051,980,732.24    769,156,429.00

   Refunds of taxes                                                                                                                  7,968,777.52

   Other cash receipts in operating activities                                                                    41,293,162.40     16,186,561.44

                      Sub-total of cash inflows from operating activities                                      1,093,273,894.64    793,311,767.96

    Cash payments for goods and services acquired                                                                838,210,003.11    721,626,515.16

    Cash payments to and     on behalf of employees                                                              117,935,562.40    116,047,528.96

    Tax and duties payments                                                                                       47,714,652.88     30,826,994.20

    Other cash payments for operating activities                                                                  61,625,120.00     73,762,376.92

                      Sub-total of cash outflows from operating activities                                     1,065,485,338.39    942,263,415.24

                           Net cash flows from operating activities                                               27,788,556.25   -148,951,647.28

2.Cash flows from investing activities

    Cash receipts from return of investments                                                                                       330,679,301.68

    Cash receipts from investments income                                                                         71,227,317.94    262,646,360.17

   Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets                      33,000.00          5,000.00

    Net cash receipts from disposal of subsidiaries and other businesses

   Other cash receipts in investing activities

                       Sub-total of cash inflows from investing activities                                        71,260,317.94    593,330,661.85

   Cash payments for acquired fixed assets, intangible assets and other long-term assets                          15,937,868.92     14,815,415.96

    Cash payments for investment                                                                                 253,285,500.00   1,010,883,060.00

    Net cash payments for acquisition of subsidiaries and other businesses

    Other cash payments in investing activities

                  Sub-total of cash outflows from investing activities                                           269,223,368.92   1,025,698,475.96

                         Net cash flows from investment activities                                              -197,963,050.98    -432,367,814.11

3.Cash flows from financing activities

   Cash received from capital injection

   Cash receipts from borrowings                                                                                 336,000,000.00    829,000,000.00

   Other cash receipts in financing activities                                                                                       5,971,249.02

                      Sub-total of cash inflows from financing activities                                        336,000,000.00    834,971,249.02

   Cash paid   for settlement of borrowings                                                                      296,900,000.00    237,000,000.00

   Cash paid for dividends, profits appropriation or payments of interest                                         35,400,176.36     23,036,986.09


                                                                            56
   Other cash payments in financing activities                                                           21,382,927.78          2,535,000.00

                 Sub-total of cash outflows from financing activities                                  353,683,104.14         262,571,986.09

                               Net cash flows from financing activities                                 -17,683,104.14        572,399,262.93

4.Effect of changes in foreign exchange rate on cash and cash equivalents                                   -61,918.58              19,977.77

5.Net increases in cash and cash equivalents                                                           -187,919,517.45          -8,900,220.69

Add: the beginning balance of cash and cash equivalent                                                 361,032,768.50         369,932,989.19

6.The ending balance of cash and cash equivalent                                                        173,113,251.05        361,032,768.50
    legal representative:Ji Zhijian head of the accounting work:Wang Jinxiuthe person in charge of the accounting office:Li Sheng




                                                                     57
                                                              Consolidated Statement of Changes in Shareholer's Equity
                                                                                                                                                                               Current year
                                                                                                                                      Equity attributable to the equity holders of the Company

                            Item                               Paid-up capital           Other equity instrument                                                 Other                                              △General
                                                                                                                                          Less: Treasury                            Special                                     Undistributed                                Minority interests    Total equity
                                                               (share capital)                                         Capital reserves                      comprehensive                       Surplus reserves      risk                      Others      Sub-total
                                                                                                                                              shares                               reserves                                        profits
                                                                                 preference   perpetual                                                         income                                              provision
                                                                                                              others
                                                                                   share        bond
1. Balance at end of last year                                 843,212,507.00                                           717,097,098.38                          2,208,669.73                     825,226,634.15                 618,445,922.58            3,006,190,831.84    54,077,970.99       3,060,268,802.83
  Add: Changes in accounting policies                                                                                                                                                                  -4,594.76                    -65,810.05                  -70,404.81          -7,761.79           -78,166.60
        Correction of prior periods errors
        Business combination within the same control
        Others
2. Balance at beginning of current year                        843,212,507.00                                           717,097,098.38                          2,208,669.73                     825,222,039.39                 618,380,112.53            3,006,120,427.03    54,070,209.20       3,060,190,636.23
3. Increase/ Decrease for current year (Decrease listed
                                                                                                                                                                                   449,374.96     41,937,399.95                    -993,624.19              41,393,150.72       2,458,638.92        43,851,789.64
with "-")
 (Ⅰ)Total of comprehensive income                                                                                                                                                                                             49,375,900.83              49,375,900.83       4,798,638.92        54,174,539.75
 (Ⅱ)Capital contribution and reduction
  1.Ordinary share
  2.Capital contributed by other equity instrument holders
  3.Share-based payments charged to equity
  4.Others
 (III)Profit appropriations                                                                                                                                                                     41,937,399.95                 -50,369,525.02               -8,432,125.07     -2,340,000.00        -10,772,125.07
  1.Appropriation to surplus reserves                                                                                                                                                             41,937,399.95                 -41,937,399.95
  2.Appropriation to general risks provision
  3.Appropriation to equity holders (or shareholders)                                                                                                                                                                            -8,432,125.07               -8,432,125.07     -2,340,000.00        -10,772,125.07
  4.Others
 (IV)Transfer within equity
  1.Transfer of capital reserve to capital (share capital)
  2.Transfer of surplus reserves to capital (share capital)
  3.Surplus reserves making up of losses
  4.Carried over the change in net asset/liability from
remeasurment on defined benefit plan
  5.Transfer of other comprehensive to retained earnings
  6.Others
 (V)Special reserves                                                                                                                                                              449,374.96                                                                 449,374.96                              449,374.96
  1.Provision for special reserve                                                                                                                                               13,214,150.71                                                               13,214,150.71                           13,214,150.71
  2.Utilisation of special reserve                                                                                                                                              12,764,775.75                                                               12,764,775.75                           12,764,775.75
 (VI)Others
4、Balance at end of current year                              843,212,507.00                                           717,097,098.38                          2,208,669.73       449,374.96    867,159,439.34                 617,386,488.34            3,047,513,577.75    56,528,848.12       3,104,042,425.87
                                     legal representative:Ji Zhijian                          head of the accounting work:Wang Jinxiu                                     the person in charge of the accounting office:Li Sheng




                                                                                                                                                     58
                                                                                      Consolidated Statement of Changes in Shareholer's Equity(continued)
          Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd                                                                                                                                                               Amount Unit:RMB
                                                                                                                                                                                   Last year
                                                                                                                                        Equity attributable to the equity holders of the Company

                            Item                                                       Other equity instrument
                                                              Paid-up capital                                                                                  Other                                               △General                                                Minority interests    Total equity
                                                                                                                                        Less: Treasury                           Special                                       Undistributed
                                                              (share capital)                                        Capital reserves                      comprehensive                       Surplus reserves       risk                      Others      Sub-total
                                                                                                                                            shares                              reserves                                          profits
                                                                                 preference   perpetual                                                       income                                               provision
                                                                                                            others
                                                                                   share        bond
1. Balance at end of last year                                843,212,507.00                                          720,215,866.78                          2,178,681.73                     809,471,199.64                  627,764,582.32            3,002,842,837.47    46,654,771.50       3,049,497,608.97
  Add: Changes in accounting policies                                                                                                                                                                  -7,116.47                  -539,927.37                 -547,043.84          -8,916.10          -555,959.94
        Correction of prior periods errors
        Business combination within the same control
        Others
2. Balance at beginning of current year                       843,212,507.00                                          720,215,866.78                          2,178,681.73                     809,464,083.17                  627,224,654.95            3,002,295,793.63    46,645,855.40       3,048,941,649.03
3. Increase/ Decrease for current year (Decrease listed
                                                                                                                       -3,118,768.40                             29,988.00                         15,757,956.22                -8,844,542.42                3,824,633.40      7,424,353.80        11,248,987.20
with "-")
 (Ⅰ)Total of comprehensive income                                                                                                                             29,988.00                                                      18,731,969.48              18,761,957.48       1,634,788.18        20,396,745.66
 (Ⅱ)Capital contribution and reduction                                                                              -3,118,768.40                                                                                            -3,386,430.61               -6,505,199.01      7,589,565.62         1,084,366.61
  1.Ordinary share
  2.Capital contributed by other equity instrument holders
  3.Share-based payments charged to equity
  4.Others                                                                                                             -3,118,768.40                                                                                            -3,386,430.61               -6,505,199.01      7,589,565.62         1,084,366.61
 (III)Profit appropriations                                                                                                                                                                      15,757,956.22               -24,190,081.29               -8,432,125.07     -1,800,000.00        -10,232,125.07
  1.Appropriation to surplus reserves                                                                                                                                                              15,757,956.22               -15,757,956.22
  2.Appropriation to general risks provision
  3.Appropriation to equity holders (or shareholders)                                                                                                                                                                           -8,432,125.07               -8,432,125.07     -1,800,000.00        -10,232,125.07
  4.Others
 (IV)Transfer within equity
  1.Transfer of capital reserve to capital (share capital)
  2.Transfer of surplus reserves to capital (share capital)
  3.Surplus reserves making up of losses
  4.Carried over the change in net asset/liability from
remeasurment on defined benefit plan
  5.Transfer of other comprehensive to retained earnings
  6.Others
 (V)Special reserves
  1.Provision for special reserve                                                                                                                                              4,613,180.31                                                                  4,613,180.31                           4,613,180.31
  2.Utilisation of special reserve                                                                                                                                             4,613,180.31                                                                  4,613,180.31                           4,613,180.31
 (VI)Others
4、Balance at end of current year                             843,212,507.00                                          717,097,098.38                          2,208,669.73                     825,222,039.39                  618,380,112.53            3,006,120,427.03    54,070,209.20       3,060,190,636.23

      legal representative:Ji Zhijian                                           head of the accounting work:Wang Jinxiuthe                                                               person in charge of the accounting office:Li Sheng




                                                                                                                                              59
                                                                                             Statement of Changes in Shareholer's Equity of Parent Company
                                                   Name of Enterprise:Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd             For the Year of 2023                                                      Amount Unit:RMB
                                                                                                                                                            Current year


                            Item                              Paid-up capital           Other equity instrument                                                   Other
                                                                                                                                           Less: Treasury                        Special
                                                              (share capital)                                           Capital reserves                      comprehensive                Surplus reserves Undistributed profits   Others    Total equity
                                                                                                                                               shares                           reserves
                                                                                preference   perpetual                                                           income
                                                                                                             others
                                                                                  share        bond
1. Balance at end of last year                                 843,212,507.00                                            755,146,592.54                          1,246,569.06              825,226,634.15        936,931,213.43              3,361,763,516.18
  Add: Changes in accounting policies                                                                                                                                                            -4,594.76            -41,352.87                   -45,947.63
        Correction of prior periods errors
        Others
2. Balance at beginning of current year                        843,212,507.00                                            755,146,592.54                          1,246,569.06              825,222,039.39        936,889,860.56              3,361,717,568.55
3. Increase/ Decrease for current year (Decrease listed
                                                                                                                                                                                            41,937,399.95          53,895,784.37               95,833,184.32
with "-")
 (Ⅰ)Total of comprehensive income                                                                                                                                                                             104,265,309.39               104,265,309.39
 (Ⅱ)Capital contribution and reduction
  1.Ordinary share
  2.Capital contributed by other equity instrument holders
  3.Share-based payments charged to equity
  4.Others
 (III)Profit appropriations                                                                                                                                                               41,937,399.95         -50,369,525.02                -8,432,125.07
  1.Appropriation to surplus reserves                                                                                                                                                       41,937,399.95         -41,937,399.95                             -
  2.Appropriation to equity holders (or shareholders)                                                                                                                                                              -8,432,125.07                -8,432,125.07
  3.Others
 (IV)Transfer within equity
  1.Transfer of capital reserve to capital (share capital)
  2.Transfer of surplus reserves to capital (share capital)
  3.Surplus reserves making up of losses
  4.Carried over the change in net asset/liability from
remeasurment on defined benefit plan
  5.Transfer of other comprehensive to retained earnings
  6.Others
 (V)Special reserves
  1.Provision for special reserve
  2.Utilisation of special reserve
 (VI)Others
4、Balance at end of current year                              843,212,507.00                                            755,146,592.54                          1,246,569.06              867,159,439.34        990,785,644.93              3,457,550,752.87
                 legal representative:Ji Zhijian                                               head of the accounting work:Wang Jinxiu                            the person in charge of the accounting office:Li Shen




                                                                                                                              60
                                                                        Statement of Changes in Shareholer's Equity of Parent Company(continued)
                                                                                                                         For the Year of 2023
                                                                                                                                                              Last year


                            Item                              Paid-up capital           Other equity instrument                                                   Other
                                                                                                                                             Less: Treasury                       Special
                                                              (share capital)                                             Capital reserves                    comprehensive                    Surplus reserves Undistributed profits   Others    Total equity
                                                                                                                                                 shares                          reserves
                                                                                preference   perpetual                                                           income
                                                                                                             others
                                                                                  share        bond
1. Balance at end of last year                                843,212,507.00                                               755,146,592.54                        1,216,581.06                  809,471,199.64        803,564,427.95              3,212,611,308.19
  Add: Changes in accounting policies                                                                                                                                                                -7,116.47            -64,048.26                   -71,164.73
        Correction of prior periods errors
        Others
2. Balance at beginning of current year                       843,212,507.00                                               755,146,592.54                        1,216,581.06                  809,464,083.17        803,500,379.69              3,212,540,143.46
3. Increase/ Decrease for current year (Decrease listed
                                                                                                                                                                    29,988.00                   15,757,956.22        133,389,480.87               149,177,425.09
with "-")
 (Ⅰ)Total of comprehensive income                                                                                                                                29,988.00                                        157,579,562.16               157,609,550.16
 (Ⅱ)Capital contribution and reduction
  1.Ordinary share
  2.Capital contributed by other equity instrument holders
  3.Share-based payments charged to equity
  4.Others
 (III)Profit appropriations                                                                                                                                                                   15,757,956.22         -24,190,081.29                -8,432,125.07
  1.Appropriation to surplus reserves                                                                                                                                                           15,757,956.22         -15,757,956.22
  2.Appropriation to equity holders (or shareholders)                                                                                                                                                                  -8,432,125.07                -8,432,125.07
  3.Others
 (IV)Transfer within equity
  1.Transfer of capital reserve to capital (share capital)
  2.Transfer of surplus reserves to capital (share capital)
  3.Surplus reserves making up of losses
  4.Carried over the change in net asset/liability from
remeasurment on defined benefit plan
  5.Transfer of other comprehensive to retained earnings
  6.Others
 (V)Special reserves
  1.Provision for special reserve                                                                                                                                               2,791,153.21                                                         2,791,153.21
  2.Utilisation of special reserve                                                                                                                                              2,791,153.21                                                         2,791,153.21
 (VI)Others
4、Balance at end of current year                             843,212,507.00                                               755,146,592.54                        1,246,569.06                  825,222,039.39        936,889,860.56              3,361,717,568.55

                                             legal representative:Ji Zhijian                                      head of the accounting work:Wang Jinxiu                             the person in charge of the accounting office:Li Sheng




                                                                                                                                61
I. General Information

  Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd (the “Company”) previously
  named as Dalian Refrigeration Company Limited, was reorganized and reformed from main
  part of former Dalian Refrigeration Factory. On December 8, 1993, the Company went to the
  public as a listed company at Shenzhen Stock Exchange Market. On March 20, 1998, the
  Company successfully went to the public at B share market and listed at Shenzhen Stock
  Exchange Market with total share capital of RMB350,014,975.00Yuan. The registered
  address is No. 106 East Liaohe Road, Dalian Economic and Technological Development
  Zone, Liaoning Province, as same as the headquarters’ address. The unified social credit code
  is 912102002423613009 on the business license.

  According to the 13th meeting of the 6th generation of board, extraordinary general meeting
  for 2015 fiscal year and ' Restricted share incentive plan (draft)', the Company planned to
  introduce an ordinary share to incentive objectives, which was 10,150,000 number of shares
  would be granted to 41 share incentive objectives at granted price of RMB5.56Yuan per share.
  Up to March 12, 2015, the Company received new added share capital of
  RMB10,150,000.00Yuan.

  The general meeting for 2015 fiscal year held on April 21, 2016 approved the profit
  distribution policy for the year of 2015, which agrees the profit distribution based on the total
  360,164,975 number of shares as share capital, paid share dividend of 5 common shares for
  every 10 shares through capital reserve. The policy stated above was fully implemented on
  May 5, 2016, and the registered capital was altered to 540,247,462.00Yuan.

  The 17thmeeting of the 6th generation of board was held on June 4, 2015 and the 2nd interim
  shareholders’ meeting was held on June 24, 2015, meeting deliberated and passed the
  proposal of non-public offering of ‘A shares’. China’s Securities Regulatory Commission
  issued SFC license [2015]3137 on December 30, 2015, approving that new non-public
  offering cannot exceeded 38,821,954 numbers of shares. The company implemented the post
  meeting procedures for China’s Securities Regulatory Commission, which is regarding
  adjustment of bottom price and the number of the shares issued after the implementation of
  profit distribution policy of 2015 in May, 2016, and accordingly revised the upper limit of
  non-public offering of share to58,645,096 number of new ‘A shares’. The company issued the
  non-public offering of 58,645,096 number of ‘A shares’ to 7 investors, and as a result, the
  total number of shares of the Company is changed to 598,892,558 shares, and the par value is
  1yuan per share and the total share capital is 598,892,558.00Yuan.

  According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company
  Limited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting
  authorized the board of directors to implement the Restricted Share Incentive Plan’ approved

                                                62
on the 3rd provisional general meeting held on September 13, 2016, the 9th meeting of the 7th
generation of board deliberated and passed the ‘Proposal about granting the restricted shares
to incentive targets’ on September 20, 2016 and set September 20 , 2016 as share granted date,
and granted 12,884,000 number of restricted shares to 118 incentive targets at granted price
of 5.62Yuan per share. By November 22, 2016, The Company has actually received the
newly subscribed registered share capital of 12,884,000.00Yuan subscribed by incentive
targets.

On May 19, 2017, the general meeting for 2016 fiscal year was held and profit appropriation
scheme for 2016 FY was approved, which was every 10 shares will be increased by 4 shares
through capital reserve based on the total 611,776,558 number of shares. After the profit
appropriation scheme, the registered capital was changed to RMB856,487,181.00Yuan.

On December 28, 2017, The Company held the 3rd extraordinary shareholders meeting in
2017, and reviewed and approved the “Proposal on Repurchasing and Retiring Partially
Restricted Stocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after The
Company's repurchase and cancellation, The Company implemented the corresponding
capital reduction procedures according to law. The registered capital of The Company was
changed from 856,487,181.00Yuan to 855,908,981.00 Yuan.

On May 4, 2018, The Company held the 21st meeting of the 7th Board of Directors, and
reviewed and approved the “Proposal on Repurchasing and Retiring Partially Restricted
Stocks of the 2015 Restricted Stock Incentive Plan". On June 29, 2018, after The Company's
repurchase and cancellation, The Company implemented the corresponding capital reduction
procedures according to law. The registered capital of The Company was changed from
855,908,981.00 Yuan to 855,434,087 .00Yuan.

On January 17th, 2019, the 1st interim shareholders’ meeting was held and approved for
“Proposal on Termination of the 2016 Restricted Stock Incentive Plan and Repurchasing and
Retiring Restricted Stocks Plan”. Up to February 25th, 2019, The Company has completed the
repurchasing and retiring stocks plan, respectively The Company shall perform the
corresponding capital reduction procedures in accordance with the law and the registered
capital decreased from 855,434,087.00Yuan to 843,212,507.00Yuan.

On December 20th, 2019, The Company held the 7th meeting of the 8th Board of Directors and
approved to change The Company’s name from Dalian Refrigeration Company Limited to
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd.

The company is in general equipment manufacturing industry. The main business activities
are the research and development, production and sales of various industrial refrigeration
components, as well as the design, production and installation of complete engineering
projects. The main products include: scroll type, piston type, screw type compressor units,
cold water machine and other refrigeration equipment and all kinds of complete sets of
                                             63
  refrigeration projects.

  This financial report is approved by the board of directors on April 24,2024. The financial
  statements will be reviewed at general meeting.

II. Financial Statements Preparation Basis

  (1) Preparing basis

  The group’s financial statements are prepared according to the actual occurred transactions
  and events, and in accordance with ‘Accounting Standards for Business Enterprises’, its
  application guidelines, interpretations and other relevant provisions promulgated by the
  Ministry of Finance (collectively referred to as "Accounting Standards for Business
  Enterprises") and " No. 15 of Information Disclosure and Reporting Rules for Publicly Listed
  Companies - General Provisions for Financial Reports" (revised in 2023) promulgated by the
  China Securities Regulatory Commission (hereinafter referred to as the "CSRC").

  (2) Going concern

  The group has assessed the capacity to continually operate within 12 months since December
  31, 2023, and hasn’t found the major issues impacting on the sustainable operation ability.
  The Company’s financial statements are prepared on the basis of going concern assumption.

III. Significant Accounting Policies and Accounting Estimates

  1. Declaration for compliance with accounting standards for business enterprises

  The financial statements are prepared in line with the requirements of Accounting Standard
  for Business Enterprise, and reflect the relative information of the financial position for the
  year ended as of December 31, 2023, operating performance, cash flow of the Company and
  the group for the year then ended truly and fully.

  2. Accounting period

  The group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.

  3. Operating cycle

  The group sets twelve months for one operating cycle.

  4. Functional currency

  The group adopts RMB as functional currency.

  5. Materiality criteria set up method and basis

  The financial statements preparation and disclosure are in line with materiality. For those
  matters to be disclosed and need judgement for materiality, materiality criteria set up method
  and basis are as follows:


                                                64
                                    In the notes to
Disclosures involved by             the financial        Materiality criteria set up method and
materiality judgement                statements                              basis


Significant receivables with                           Single provision is over 10 million Yuan and
individual provision for bad Note VI.3                 represents more than 10% of the total
debts                                                  provision
                                                       Single provision is over 10 million Yuan and
Collection    or   reverse     of
                                    Note VI.3          represents more than 10% of the total
significant receivables
                                                       provision
                                                       Single provision is over 10 million Yuan and
Significant receivables written
                                    Note VI.3          represents more than 10% of the total
off
                                                       provision
Significant   construction     in
                                    Note XVI.16        Single project budget over 30 million Yuan
progress
                                                       The   book    value    of     long-term   equity
                                                       investment in a single investee accounts for
                                                       more than 10% of the group's net assets and
                                                       the amount is greater than 100 million Yuan,
Significant JV or associates        Note VIII.3
                                                       or the gain or loss on investment under the
                                                       long-term equity investment equity method
                                                       accounts for more than 10% of the group's
                                                       consolidated net profit
                                                       Subsidiary’s net assets are more than10% of
Significant subsidiary                                 the group asses and its net profit is more than
                                                       10% of consolidated profit

  6. Accounting for business combination under same control and not under same control

  (1) Business combination under the same control

  Business combination under the same control is the situation where entities participating the
  merger are controlled by the same party or controlled by parties under same ultimate control
  before and after merger and the control is not temporary.

  The group, as an acquirer, the assets and liabilities that the group obtained in a business
  combination under the same control should be measured on the basis of their carrying amount
  of the acqiree in the ultimate control party’s consolidated financial statements on the
  combining date. As for the balance between the carrying amount of the net assets obtained by
  the combining party and the carrying amount of the consideration paid by it, the capital


                                                  65
surplus shall be adjusted. If the capital surplus is not sufficient to be offset, the retained
earnings shall be adjusted.

(2) Business combination not under same control

Business combination not under the same control is the situation where entities participating
the merger are not controlled by the same party or not controlled by parties under same
ultimate control before and after merger.

When the group is an acquirer, for a business combination not under same control, the asset,
liability and contingent liability obtained, shall be measured at the fair value on the
acquisition date. The difference, when combination cost exceeds proportionate share of the
fair value of identifiable net assets of acquire should be recognized as goodwill. If the
combination cost is less than proportionate share of the fair value of identifiable net assets of
acquiree, firstly, fair value of identifiable asset, liability or contingent liability shall be
reviewed, and so the fair value of non-monetary assets or equity instruments issued in the
combination consideration , after review, still the combination cost is less than proportionate
share of the fair value of identifiable net assets of acquire, the difference should be recognized
as non-operating income.

If a business consolidation not under common control is finally achieved in stages, when
preparing the consolidated financial statements, the acquirer shall remeasure its previously
held equity interest in the acquiree at its fair value on acquisition date and recognize the gain
or loss as investment income for the current period. Other comprehensive income, under
equity method accounting rising from the interest held in acquiree in relation to the period
before the acquisition, and changes in the value of its other equity other than net profit or loss,
other comprehensive income and profit appropriation shall be transferred to investment gain
or loss for the period in which the acquisition incurs, excluding the other comprehensive
income from the movement on the remeasurement of ne asset or liability of defined benefit
plan.

7. Criteria of control judgment and method of preparation of consolidated financial
  statements

Consolidation scope is determined on the control basis including the Company and all
subsidiaries controlled by the Company. Control criteria is that the group has the power over
the investees, enjoy the variable return by involving the relative activities of the investees and
also has the impact on the return amount through the power over the investees.

If subsidiaries adopt different accounting policy or have different accounting period from the
parent company, appropriated adjustments shall be made in accordance with the Company
policy in preparation of the consolidated financial statements.

All significant intergroup transactions, outstanding balances and unrealized profit shall be

                                               66
eliminated in full when preparing the consolidated financial statements. Portion of the
subsidiary’s equity not belonging to the parent, profit, loss for the current period, portion of
other comprehensive income and total comprehensive belonging to minority interest, shall be
presented separately in the consolidated financial statements under “minority interest of
equity”, minority interest of profit and loss”, “other comprehensive income attributed to
minority interest” and “total comprehensive income attributed to minority interest” title.

If a subsidiary is acquired under common control, its operation results and cash flow shall be
consolidated since the beginning of the consolidation period. When preparing the comparative
consolidated financial statements, adjustments shall be made to relevant items of comparative
figures as regarded that reporting entity established through consolidation has been always
existing since the point when the ultimate controlling party starts to have the control.

If a subsidiary is acquired not under common control, its operation results and cash flow shall
be consolidated since the beginning of the consolidation period. In preparation of the
consolidated financial statements, adjustments shall be made to subsidiary’s financial
statements based on the fair value of its all identifiable assets, liability or contingent liability
on the acquisition date.

When the group partially disposes of the long –term equity investment in subsidiary without
losing the control over it, in the consolidated financial statements, the difference, between
disposals price and respective disposed value of share of net assets in the subsidiary since the
acquisition date or combination date, shall be adjusted for capital surplus or share premium,
no enough capital surplus, then adjusted for retained earnings.

When the group partially disposes of the long –term equity investment in subsidiary and lose
the control over it, in preparation of consolidated financial statements, remaining share of
interest in the subsidiary shall be remeasured on the date of losing control. Sum of the share
disposal consideration and fair value of remaining portion of shareholding minus the share of
the net assets in the subsidiary held based on the previous shareholding percentage since the
acquisition date or combination date, the balance of above is recognized as investment
gain/loss for the period and goodwill shall be written off accordingly. Other comprehensive
income relevant to share investment in subsidiary shall be transferred to investment gain /loss
for the period on the date of losing control.

When the group partially disposes of the long –term equity investment in subsidiary and lose
the control over it by stages, if all disposing transactions are bundled, each individual
transaction shall be seen as a transaction of disposal of a subsidiary by losing control. The
difference between the disposal price and       the share of the net assets in the subsidiary held
before the date of losing control, shall be recognize as other comprehensive income until the
date of losing control where it is transferred into investment gain/ loss for the current period.
If the equity investment in the subsidiary is disposed of by stages through multiple

                                                67
transactions until the control is lost, and it is not a bundled transaction, each transaction shall
be accounted for separately according to whether the control is lost.

8. Cash and cash equivalent

The cash listed on the cash flow statements of the Company refers to cash on hand and bank
deposit. The cash equivalents refer to short-term (normally with original maturities of three
months or less) and liquid investments which are readily convertible to known amounts of
cash and subject to an insignificant risk of changes in value.

9. Translation of foreign currency

(1) Foreign currency transaction

Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank
of China (“PBOC”) on the 1st day of the month when the transactions are accounted initially.

At the balance sheet date, foreign currency monetary items should be converted into reporting
currency at the balance sheet date’s spot exchange rate. Exchange differences should be taken
into the current profits and losses except special foreign currency borrowings for construction
and producing assets which are qualifying for assets capitalization, should be capitalized.
Foreign currency non-monetary items, which are recorded in historical cost, should be still
recorded at the spot exchange rate when the transaction occurred and no change on reporting
currency amount. Foreign currency non-monetary items, which are measured at fair value,
should be recorded in the spot exchange rate at the date measuring the fair value and the
differences should be recognized as profit and loss from fair value changes and included in
the current profits and losses. Invested capital in foreign currency shall be converted into
reporting currency at FX rate at when the investment is received, and no foreign exchange
difference arises between capital received and monetary items.

10. Financial instruments

(1) Recognition and derecognition of financial instruments

The group shall recognize a financial asset or a financial liability when becoming party to the
contractual provisions of the instrument.

An entity shall derecognize a financial asset(or a part of it or a group of similar financial asset)
when, and only when: 1) the contractual rights to the cash flows from the financial asset
expire, or 2) the entity transfers contractual rights to receive the cash flows of a financial asset,
or assumes a contractual obligation to pay those cash flows received to the 3rd party in full
amount in time according to the ‘passing-through’ agreement and the entity substantially
transfers all the risks and rewards of ownership of the financial asset in nature, or the entity
neither transfers nor retains substantially all the risks and rewards of ownership of the
financial asset, but the entity has not retained control.

                                               68
Financial liabilities shall be derecognized if the obligation of the liability is fulfilled,
cancelled or expired. An exchange between an existing borrower and lender of debt
instruments with substantially different terms shall be accounted for as an extinguishment of
the original financial liability and the recognition of a new financial liability. Similarly, a
substantial modification of the terms an existing financial liability shall be accounted for as an
extinguishment of the original financial liability and the recognition of a new financial
liability. The difference between the carrying amount of a financial liability extinguished and
the consideration paid, including any non-cash assets transferred or liabilities assumed, shall
be recognized in profit or loss.

A regular way purchase or sale of financial assets shall be recognized and derecognized, as
applicable, using trade date accounting or settlement date accounting.

(2) Classification and measurement of financial assets

At initial recognition, the group shall classify financial assets as measured at amortized cost,
fair value through other comprehensive income or fair value through profit or loss on the
basis of both the group’s business model for managing the financial assets and the contractual
cash flow characteristics of the financial asset. Only when the business model for managing
the financial assets is changed, the affected financial assets shall be reclassified.

In determining the business model, the group considers, among others, the way in which the
company evaluates and reports the performance of financial assets to key management
personnel, the risks affecting the performance of financial assets and the way in which they
are managed, and the way in which the relevant business managers are remunerated. In
assessing whether the objective is to collect contract cash flows, the group needs to make an
analytical judgment on the reasons, timing, frequency and value of the sale of the financial
assets before the maturity date.

In determining the contract cash flow characteristics, the group is required to determine
whether the contract cash flow is only the payment of principal and interest based on the
outstanding principal, (including the assessment of the time value of money correction,
judging any significant difference between it and the baseline cash flow/ for financial assets
containing early repayment characteristics, is required to determine whether the fair value of
early repayment features is very small).

Financial assets are measured at fair value at the initial recognition, but accounts receivable or
notes receivable arising from the sale of goods or provision of services, etc., do not contain a
significant financing component or do not consider the financing component of less than one
year, the initial measurement is based on the transaction price.

For financial assets that are measured at fair value, the related transaction costs are directly
included in current profit or loss, and those costs of other categories of financial assets are

                                               69
included in their initial recognized amounts.

Financial assets subsequent measurement based on the classification

1) A financial asset measured at amortized cost

A financial asset shall be measured at amortized cost if both of the following conditions are
met: ①the financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows;②the contractual terms of the financial asset
give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding. The financial assets of this category include: monetary fund,
receivable, notes receivable and other receivables.

2) Debt instruments measured at fair value through other comprehensive income

A financial asset shall be measured at fair value through other comprehensive income if both
of the following conditions are met: ①the financial asset is held within a business model
whose objective is achieved by both collecting contractual cash flows and selling financial
assets and ②the contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding.
The effective interest rate is applied to interest income. A gain or loss arising from a financial
asset measured at fair value through other comprehensive income, which is not part of
hedging relationship shall be recognized in other comprehensive income apart from interest
income, impairment loss and foreign exchange difference. When this type of financial assets
is derecognized, accumulated gain or loss previously in the other comprehensive income shall
be out of it and accounted into retained earnings when the financial asset is derecognized. The
financial assets of this category include: receivable financing.

3) Equity instruments measured at fair value through other comprehensive income

The group may make an irrevocable election for particular investments in equity instruments
that it would be measured at fair value through other comprehensive income, but once the
election is made, it is irrevocable. The group only recognizes the dividend (apart from the
dividend as investment cost pay back) into profit and loss and fair value movement
subsequently will be recognized into comprehensive income and no need for impairment
provision. When this type of financial assets is derecognized, accumulated gain or loss
previously in the other comprehensive income shall be out of it and accounted into retained
earnings when the financial asset is derecognized. The financial asset of this category is
equity instruments.

4) A financial asset measured as fair value through profit or loss

Apart from classified as the amortized cost financial assets and as fair value through other
comprehensive income financial assets, a financial asset is classified as fair value through
profit or loss. The group shall subsequently measure this financial asset at its fair value,
                                                70
except for hedging accounting, any gain or loss on FVTPL shall be accounted into profit and
loss. The financial assets of this category include: tradable financial asset other non-current
financial asset.

A financial asset shall be classified as fair value through profit or loss if it is recognized
contingent consideration through business combination, which is not under same control
situation.

(3) Classification, basis for recognition and measurement of financial liability

Except for the financial guarantee contract, commitments to provide a loan at a belowmarket
interest rate and financial liabilities that arise when a transfer of a financial asset does not
qualify for derecognition or when the continuing involvement approach applies, the group
shall initially classify all financial liabilities as it measured at amortized cost or financial
liabilities at fair value through profit or loss. For financial liabilities that are measured at fair
value, the related transaction costs are directly included in current profit or loss, and those
costs of other categories of financial assets are included in their initial recognized amounts.

Financial liabilities subsequent measurement based on the classification

1) Financial liabilities as it subsequently measured at amortized cost

Effective interest method is applied to financial liabilities as subsequently measured at
amortized cost

2) Financial liability as it measured at fair value through profit or loss

Financial liability measured at fair value through profit or loss including tradable financial
liability (derivative instrument of financial liability included) and designated as financial
liability measured at fair value through profit or loss. Tradeable financial liability (including
derivate instrument of financial liability) are subsequently measured at fair value. The net
gain or loss arising from changes in fair value are recorded in profit or loss for the period in
which they are incurred. Financial liability designated as it measured at fair value through
profit or loss shall be subsequently measured at fair value, except for changes in fair value
caused by changes in the group's own credit risk, which are recognized in other
comprehensive income, other changes in fair value are recognized in profit or loss for the
current period; The group recognizes all fair value changes (including the amount affected by
changes in its own credit risk) in profit or loss if the inclusion of changes in fair value
caused by changes in its own credit risk in other comprehensive income would cause or
widen the accounting mismatch in profit or loss for the current period.

(4) Financial instrument impairment

Based on expected credit loss, the group shall apply the impairment requirements for the
followings: ① a financial asset measured at amortized cost; ② debt investment measured

                                                71
at fair value and changes in fair value is through other comprehensive income; ③ lease
receivable; ④ a contractual asset and financial guarantee contract.

Expected credit loss is the weighted average of credit losses with the respective risks of a
default occurring as the weights. A credit loss herein is referred to as the present value, at
original effective rate, of the difference between the contractual cash flows that are due to the
group under the contract; and the cash flows that the Company expects to receive, that's the
present value of the total cash shortage. The group shall measure expected credit losses of a
financial instrument in a way that reflects: ①an unbiased and probabilityweighted amount
that is determined by evaluating a range of possible outcomes; ② the time value of money;
and ③reasonable and supportable information that is available without undue cost or effort at
the reporting date about past events, current conditions and forecasts of future economic
conditions.

Expected credit loss of financial instrument is assessed individually and portfolio. The group
assesses the expected credit loss based on the portfolio in accordance with the common
characteristics of credit risk which involves type of financial instrument, credit risk grade, and
age of trade receivables.

When assessing expected credit losses, the group considers all reasonable and supportable
information, including that which is forward-looking. In making these judgments and
estimates, the group extrapolates the expected changes in the debtor's credit risk based on
historical repayment data combined with factors such as economic policies, macroeconomic
indicators and industry risks. Different estimates may affect the provision for impairment, and
the provision already made may not equal the actual amount of impairment losses in the
future.

1) Impairment testing method of receivable and contract asset

For receivable, notes receivable and contract asset etc., which don’t contain significant
financing component and arise from sales of products and service provision, the group adopts
simplified method to account expected credit loss provision at an amount equal to the whole
lifetime expected credit losses.

For lease premium receivable, trade receivable containing significant financing component,
and contract asset, the group adopts simplified method to account expected credit loss
provision at an amount equal to the whole lifetime expected credit losses.

The group determines the expected credit loss of trade receivable on the basis of portfolios
with common characteristics of credit risk, which are considered by expected credit loss
measurement reflection, by reference to historical experience of credit loss and by
comparison of receivable past due days/ receivable age with default risk rate, unless the single
credit loss is separately recognized for contractual payments that is significant in amount and

                                              72
  credit impaired. If certain client is significant different from others in terms of credit risk
  characteristics, or the client’s credit risk has significantly increased, such as experiencing
  severe finance difficulty, its expected credit loss is obviously higher than it to be at
  accounting age, the group will make separate credit loss provision for this client’s receivable.

  ① Portfolio category and recognition basis of receivable ( contract asset)

  The group classifies accounts receivable (and contract assets) according to the similarity and
  relevance of credit risk characteristics based on information such as age, nature of payments,
  credit risk exposure, historical debt collection, etc. For accounts receivable (and contract
  assets), the group determines that aging is the primary factor affecting its credit risk and
  therefore, the group assesses its expected credit losses on the basis of aging portfolios. The
  group calculates the overdue age based on the payment date agreed in the contract.

  No expected credit loss is recognized for receivables from related party within consolidated
  scope as the group assesses its credit risk is relatively low.

  ② Portfolio category and recognition basis of notes receivable

Portfolio category                           Expected credit loss accounting estimate policy
                                         Lower credit risk assessed by the management, no
Bank acceptance note portfolio
                                         expected credit loss recognition
Commercial acceptance note               Same as receivables portfolio and provided for excepted
portfolio                                credit loss allowance based on expected credit loss rate

 2) Impairment testing method of debt investment, other debt investment, loan commitments
    and financial guarantee contracts

  With the exception of financial assets (such as debt investments, other debt investments), loan
  commitments and financial guarantee contracts for which the simplified measurement method
  is adopted above, the group adopts the general method (three-stage method) for the provision
  of expected credit losses. At each balance sheet date, the group assesses whether its credit risk
  has increased significantly since the initial recognition, and if the credit risk has not increased
  significantly since the initial recognition, in the first stage, the group measures the loss
  provision at an amount equivalent to the expected credit loss over the next 12 months and
  calculates interest income based on the carrying balance and effective interest rate; If the
  credit risk has increased significantly since the initial recognition but no credit impairment
  has occurred, in the second stage, the group measures the loss provision at an amount
  equivalent to the expected credit loss over the entire duration and calculates interest income
  based on the carrying balance and effective interest rate; If credit impairment occurs after
  initial recognition, in the third stage, the group measures the loss provision at an amount
  equivalent to the expected credit loss over the entire duration and calculates interest income at
  amortized costs and effective interest rates. For financial instruments with only low credit risk

                                                 73
at the balance sheet date, the group assumes that their credit risk has not increased
significantly since initial recognition

The whole life expected credit loss refers to the expected credit loss caused by all possible
default events during the whole expected life of the financial instrument. Expected credit
losses over the next 12 months are expected credit losses resulting from defaults on financial
instruments that may occur within 12 months after the balance sheet date (or if the expected
duration of the financial instrument is less than 12 months) and are part of the overall
expected credit losses over the life of the financial instrument.

Criteria of significant increase in credit risk and definition of credit impaired assets are
disclosed on Note X.1

(5) Recognition and measurement of transfer of financial assets

A financial asset is derecognized when the financial asset has been transferred together with
substantial all risks and rewards to the transferee. A financial asset can not be derecognized
when the substantial all risks and rewards to the financial asset has been retained. When the
all risks and rewards of the financial asset are neither transferred nor retained, but the group
has given up its control of the financial asset, the financial asset shall be derecognized and
recognize the asset and liability originated. Where control of the financial asset is not
relinquished, the relevant financial asset shall be recognized according to the extent to which
it continues to be involved in the transferred financial asset, and the relevant liability shall be
recognized accordingly.

In the case where the financial asset as a whole qualifies for the derecognition conditions, the
difference between the carrying value of transferred financial asset at the derecognition date
and the sum of the consideration received for transfer and the accumulated amount of changes
in fair value in respect of the amount of partial derecognition ( financial assets involved in
transfer must qualify the following conditions: ① the financial asset is held within a
business model whose objective is not only for collecting contractual cash flows but also for
sale; ②the contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest based on the principal amount outstanding) ,
that was previously recorded under other comprehensive income is transferred into profit or
loss for the period.

In the case where only part of the financial asset qualifies for derecognition, the carrying
amount of financial asset being transferred is allocated between the portions that to be
derecognized and the portion that continued to be recognized according to their relative fair
value. The difference between the amount of consideration received for the transfer and the
accumulated amount of changes in fair value that was previously recorded in other
comprehensive income for the asset partially qualified for derecognition (financial assets
involved in transfer must qualify the following conditions:① the financial asset is held
                                               74
within a business model whose objective is not only for collecting contractual cash flows but
also for sale; ; ②the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest based on the principal amount
outstanding ) and the above-mentioned allocated carrying amount is charged to profit or loss
for the period.

Where the assets continue to be involved by providing financial guarantees for the transferred
financial assets, the assets that continue to be involved in the same form are recognized at the
lower of the carrying value of the financial assets and the amount of the financial guarantees.
Financial guarantee amount means the maximum amount of consideration received that will
be required to be repaid.

(6) Distinguish between financial liability and equity instrument and accounting

Financial liability and equity instrument shall be distinguished in accordance with the
following standards: ① if the group cannot unconditionally avoid paying cash or financial
asset to fulfil a contractual obligation, the contractual obligation is qualified or financial
liability. For certain financial instrument, although there are no clear terms and conditions to
include obligation of paying cash or other financial liability, contractual obligation may
indirectly be formed through other terms and conditions. ② the group’s own equity
instrument shall also be considered whether it is the substitute of cash, financial asset or it is
the remaining equity, after the issuer deducts liability, enjoyed by the equity holder , if it must
or can be used to settle a financial asset. If the former, the instrument is a financial liability of
the issuer, otherwise it is an equity instrument of the issuer. In certain circumstances, financial
instrument contract is classified as financial liability, if financial instrument contract specifies
the Company must or can use its own equity to settle the financial instrument, the contractual
amount of right or obligation equals to that of the numbers of own equity instrument available
or to be paid multiplied by fair value when settling, nevertheless the amount is fixed, or
varied partially or fully based on the its own equity’s market price(such as interest rate,
certain commodity’s or financial instrument’s      price variance).

When classifying a financial instrument (or its component) in the consolidated statements, the
group takes all terms and conditions agreed by the its member and instrument holder into
consideration. If the group because of the instrument, as a whole, bears settlement obligation
by paying cash, other financial asset or other means resulted in financial liability, the
instrument shall be classified as financial liability.

(7) Derivative financial instrument

The group uses derivative financial instruments such as foreign exchange forward contracts,
commodity forward contracts and interest rate swaps to hedge exchange rate risk, commodity
price risk and interest rate risk respectively. Derivative financial instruments are initially
measured at their fair value on the date the derivative transaction contract is signed, and are
                                                75
subsequently measured at their fair value. A derivative instrument with a positive fair value is
recognized as an asset and a negative fair value is recognized as a liability.

Except hedging accounting, all gain or loss from the FV movement of derivative instrument
shall be recognized in the income statement.

(8) Financial asset and financial liability offset

Financial asset and financial liability shall be presented in the balance sheet separately and
cannot be offset, unless the following conditions are all met: ①the Company has the legal
right to recognized offset amount and the right is enforceable. ②the Company plans to
receive or a legal obligation to pay cash at net amount.

11. Inventories

Inventories are raw material, low-valuable consumable, goods on transit, working-in-progress,
finished goods, and cost to fulfil the contract etc.

The inventories are processed on perpetual inventory system, and are measured at their actual
cost on acquisition. Weighted average cost method is taken for measuring the inventory
dispatched or used. Low value consumables and packaging materials is recognized in the
income statement by one-off method.

At the balance sheet date, inventory is measured at the lower of cost and net realizable value.
If the cost of the inventory is higher than its net realizable value, a provision is made for the
decline in the price of the inventory and it is accounted in the current profit or loss. Net
realizable value is the amount of the estimated selling price of inventory in daily activities
less the estimated costs to be incurred at completion, estimated selling expenses and related
taxes.

Impairment provision for the group's raw materials/goods in stock/WIP/ cost to fulfil the
contract is made on an individual inventory item, and when determining its net realizable
value, the inventory of goods in stock and materials used for sale are determined at the
estimated selling price of the inventory less estimated selling expenses and related taxes;
Inventory of materials held for use in production is determined at the estimated selling price
of the finished goods produced less the estimated costs to be incurred up to completion,
estimated selling expenses and

12. Contract asset and contact liability

(1) Contract asset

Contract asset is an entity’s right to consideration in exchange for goods or services that the
entity has transferred to a customer when that right is conditioned on something other than the
passage of time. For example, the group sold two goods that can be clearly distinguished to
the client, then the group has the right to consideration in exchange of the goods because one

                                               76
of the goods are delivered, but the consideration’s collection is conditioned on the other
goods delivery, in this case, the right to consideration shall be recognized as contract asset.

Expected credit loss recognition of contract asset is referred to the Note III、10 Provision for
impairment of financial assets.

(2) Contract liability

An entity’s obligation to transfer goods or services to a customer for which the entity has
received consideration (or the amount is due) from the customer. If a customer pays
consideration, or the group has a right to an amount of consideration that is unconditional
before the group transfers a good or service to the customer, the group shall present the
contract as a contract liability when the payment is made or the payment is due (whichever is
earlier).

13. Assets relevant to contract cost

(1) Assets recognition methods in relation to contract cost

Assets relevant to contract cost in the group include cost to fulfill the contract and cost to
obtain a contract. Cost to fulfill the contract is presented under inventory and other
non-current assets. Cost to obtain a contract is presented under other current assets and other
non-current assets.

If the costs incurred in fulfilling a contract with a customer are not within the scope of
another Standard such as inventory , fixed assets or intangible assets , an entity shall
recognize an asset from the costs incurred to fulfill a contract only if those costs meet all of
the following criteria: the costs relate directly to a contract or to an anticipated contract,
including direct labor, direct materials and overheads which is clearly stated to be borne by
the client and any other cost in line with the contract; the costs enhance resources of the group
that will be used in performance obligations in the future; and the costs are expected to be
recovered.

An asset as the incremental costs of obtaining a contract with a customer shall be recognized
if the group expects to recover those costs. The group may recognize the incremental costs of
obtaining a contract as an expense when incurred if the amortization period of the asset t is
one year or less. The incremental costs of obtaining a contract are those costs that the group
incurs to obtain a contract with a customer that it would not have incurred if the contract had
not been obtained (for example, a sales commission). Other expenses incurred in order to
obtain a contract rather than the incremental cost, and expected to be recovered (regardless of
whether the contract is obtained such as travelling expenses) shall be recognized as an
expense when incurred, unless those costs are explicitly chargeable to the customer.

(2) Amortization of asset relevant to contract cost


                                              77
An asset recognized in accordance with contract cost shall be amortized on a systematic basis
that is consistent with the transfer to the customer of the goods or services to which the asset
relates.

(3) Impairment of asset relevant to contract cost

If the carrying value of the group's assets related to the contract cost is higher than the
following two differences, the group will make the impairment provision for the excessive
part and recognize the asset impairment loss: ① The remaining consideration that the group
is expected to obtain due to the transfer of the commodities related to the asset; ② Estimate
the costs to be incurred for the transfer of the relevant goods

14. Long-term equity investment

Long term equity investments are the equity investment in subsidiary, in associated company
and in joint venture.

(1) Judgement on control, joint control and significant influence

Equity investments in which the group has a significant impact on the investee are
investments in associates.

Significant influence refers to having the power to participate in the decision-making of the
financial and operational policies of the investee, but not being able to control or jointly
control the formulation of these policies with other parties. Significant influence exists when
the entity directly or indirectly owned 20% or more but less than 50% voting shares in the
investee, unless there is explicit evidence that the company cannot participate in the
production and operation decisions of the investee or have control over the investee.

When having less than 20% voting shares, the group’s significant influence still exists if the
followings are taken into accounts: representation on the board of directors or equivalent
governing body of the investee, participation in financial or operating activities
policy-making processes, material transactions between the investor and the investee,
interchange of managerial personnel or provision of essential technical information etc.

The group’s joint venture investment is an equity investment whereby the parties have jointly
control over it and have rights to the net assets of the investee. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require the unanimous consent of the parties sharing control. The
group’s judgement on joint control is based on the joint arrangement that all participants or
combinations of participants collectively control the arrangement and that decisions relating
to the activities of the arrangement must be made with the unanimous consent of those
participants who collectively control the arrangement.

(2) Accounting

                                              78
The group initially measures the long-term investment in line with the initial cost for
acquiring the investment.

The initial investment cost for long-term equity investment acquired through business
combination under common control, is the carrying amount presented in the consolidated
financial statements of the share of net assets at the combination date in the acquired
company. If the carrying amount of net assets at the combination date in the acquired
company is negative, investment shall be recognized at zero.

If long-term equity investment is acquired through business combination not under common
control, initial investment cost shall be the combination cost. If the equity investment of
investee not under common control is acquired by stages and it’s not a bundled transaction,
the carrying amount of the equity investment held previously plus newly increased investment
cost are taken as the initial investment cost.

Apart from the long-term equity investments acquired through business combination, the cost
of investment for the long-term equity investments acquired by cash payment is the amount of
cash paid, relevant direct expense, tax and other necessary expenses for the investment. For
long-term equity investment acquired by issuing equity instruments, the cost of investment is
the fair value of the equity instrument issued.

The Company adopts cost model for investment in subsidiary on separate financial statement.
Under cost model, the long-term equity investment is measured at initial investment cost.
When more investment is added, it shall increase the carrying amount of investment by
adjusting the fair value of additional investment and relevant transaction expenses. Cash
dividend or profit declared by investee shall be recognized as investment gain/loss for the
period based on the proportion share in the investee.

The Company adopts equity method for investment in joint venture and affiliate. Under
equity method, if the initial investment cost is greater than the share of fair value of the
identifiable net assets in the investee, the initial investment cost of long-term equity
investment is no need to be adjusted; If the initial investment cost is less than the share of fair
value of the identifiable net assets in the investee , the difference shall be recorded into the
current profit and loss, and the cost of long-term equity investment shall be adjusted at the
same time.

Long-term equity investment subsequently, under equity method, shall be adjusted for it
carrying amount according to the share of equity increase or decrease in the investee. The
Company shall recognize its share of the investee’s net gain or losses after the investee’s net
profit adjustment, based on the fair value of the investee’s individual identifiable assets at
the acquisition date, after making appropriate adjustments thereto in conformity with the
accounting policies and accounting period, and offsetting the unrealized profit or loss from
the inter-group transactions, not constituting the business, between the entity and its
                                                 79
associates and joint ventures according to the shareholding attributable to the group (full
amount of loss shall be recognized if the inter-group transaction is impairment loss). The
group recognizes net losses incurred by investee to the extent that the carrying value of
long-term equity investments and other long-term interests substantially constituting net
investments in investee are written down to zero, except where the group is obliged to bear
additional losses.

The difference between the book value of long-term equity investment and actual acquisition
cost shall be recognized in the gain or loss of investment when the long-term equity
investment is disposed of.

For long-term investments accounted under equity method, other comprehensive income
recorded shall be accounted on the same basis as the investee directly disposing of related
assets or liability when equity method is not used any longer. The movements of
shareholder’s equity, other than the net profit or loss, other comprehensive income and profit
distribution previously recorded in the shareholder’s equity of the Company are recycled to
investment income for the period on disposal.

If the remaining equity after the partially disposal is still accounted for under the equity
method, the relevant other comprehensive income previously recognized under the equity
method, is treated on the same basis as the direct disposal of the relevant assets or liabilities
by the investee and is carried forward on a proportional basis, and the owner's equity, which
is apart from net profit and loss, other comprehensive income and profit distribution of the
investee, shall be recognized and proportionally transfers to current investment income.

Where the entity has no longer joint control or significant influence in the investee company
as a result of partially disposal of the investment, the remaining investment will be accounted
for in line with the Recognition and Measurement of Financial Instruments Standard -No 22
of Accounting Standards for Business Enterprises(No7 Caikuai [2017]), and the difference
between the fair value of remaining investment at the date of losing joint control or
significant influence and its carrying amount shall be recognized in the profit or loss for the
year.
Where the entity has no longer control over the investee company as a result of partially
disposal of the investment, the remaining investment will be changed to be accounted for
using equity method providing remaining joint control or significant influence over the
investee company. The difference between carrying amount of disposed investment and
consideration received actually shall be recognized as investment gain or loss for the period,
and investment shall be adjusted accordingly as if it was accounted for under equity model
since acquisition. Where the entity has on longer joint control or significant influence in the
investee as a result of disposal, the investment shall be accounted for in accordance with the
Recognition and Measurement of Financial Instruments Standard -No 22 of Accounting
                                              80
    Standards for Business Enterprises(No7 Caikuai [2017]), and difference between the carrying
    amount and disposal consideration shall be recognized as investment gain or loss for the
    period, and the difference between the fair value of remaining investment at the date of losing
    control and its carrying amount shall be recognized in the profit or loss for the year.

    15. Investment property
    Investment property is held to earn rentals or for capital appreciation or both and includes
    property, building and use right of land. They are measured at cost model.
    Investment property is depreciated or amortized on straight line basis and its expected useful
    life, net residual value rate and annual depreciation rate is as follows:

                                  Useful life        Estimated net residual value         Annual
Category
                                    (years)                   rate (%)                depreciation rate
Use right of land                     50                          0                           2
Property and Buildings                40                        3/10                     2.25-2.43

    16. Fixed assets

    Recognition criteria of fixed assets: defined as the tangible assets which are held for the
    purpose of producing goods, rendering services, leasing or for operation & management, and
    have more than one year of useful life.

    Fixed assets shall be recognized when the economic benefit probably flows into the group and
    its cost can be measured reliably. Fixed assets include: building, machinery, transportation
    equipment, electronic equipment and others.

    All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are
    still being used and land is separately measured. Straight-line depreciation method is adopted
    by the group. Estimated net residual value rate, useful life, depreciation rate as follows:



                                              Useful life   Estimated net residual   Annual depreciation
No                  Category
                                                (years)         value rate (%)        rate (%)
1      Property and Buildings                   20-40            3、5、10                 2.25-4.85
2      Machinery equipment                       5-22        0.5-1、3、5、10              4.09-19.90
3      Transportation equipment                  5-12          1、3、5、10                 7-33.33
4      Electronic equipment &others              3-15         0-1、3、5、10                6-33.33

    The group should review the estimated useful life, estimated net residual value and
    depreciation method at the end of each year. If any change has occurred, it shall be regarded
    as a change in the accounting estimates.

    17. Construction in progress

                                                    81
The cost of construction in progress is determined according to the actual construction
expenditure, including the necessary construction expenditure incurred during the
construction period, the capitalized borrowing cost and other related expenses before the
construction reaches the condition expected for use.

Constructions in progress are transferred to fixed assets based on the construction budget and
actual costs on the date when completing and achieving estimated usable status, and the fixed
assets should be depreciated in the next month. Adjustment will be made upon confirmation
of their actual values after implementing the completion and settlement procedures.

The construction in progress shall be transferred to fixed assets when it reaches the expected
usable state, and the criteria are as follows:

Items                                                 Criteria of transferring to FA
Property and Buildings      Earlier of actual starting of use and completion of inspection
Machinery equipment         Earlier of actual starting of use and completion of installation / inspection

18. Intangible asset

The group’s intangible assets include use right of land, patents, non-patented technologies and
others. They are measured at actual cost at acquisition day. For acquired assets, the actual cost
is measured at actual price paid and relevant other expenses. Invested intangible asset shall be
measured at actual cost as contracted or agreed value, however fair value will be taken if the
contracted or agreed value is not fair.

(1) Useful life and the basis for recognition, estimation, amortization method or review
     procedure

Use right of land shall be amortized evenly within the amortization period since the remised
date. Patents, technologies and other intangible assets are amortized over the shortest of their
estimated useful life, contractual beneficial period and useful life specified in the law.
Amortization charge is included in the cost of assets or expenses, as appropriate, for the
period according to the usage of the assets. At the end of the year, for definite life of
intangible assets, their estimated useful life and amortization method shall be assessed. Any
change shall be treated as change on accounting estimate.

(2) The scope and accounting of research and development

The group separates the expenditure on internal research and development projects into
research phase expenditure and development phase expenditure. At research phase,
expenditure are expenses directly relevant to research activity, including R&D employee’s
salary, materials, depreciation, technology cooperation cost and assessment testing fees. At
development phase, expenses can be capitalized only when meeting the following conditions:
(a)the technical feasibility of completing the intangible asset so that it will be available for

                                                 82
use or sale.

(b)its intention to complete the intangible asset and use or sell it.

(c)how the intangible asset will generate probable future economic benefits. Among other
things, the entity can demonstrate the existence of a market for the output of the intangible
asset or the intangible asset itself or, if it is to be used internally, the usefulness of the
intangible asset.

(d)the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.

(e)its ability to measure reliably the expenditure attributable to the intangible asset during its
development.

Any expenditure not qualifying for the above conditions shall be accounted into profit and
loss account.

The projects expenditure will go to the development stage and start to be capitalized after
meeting the above conditions, and passing the technical feasibility and economic feasibility
studies, and being approved after evaluation.

19. Impairment of long-term assets

The group assesses whether there is any indication that long-term equity investment,
investment property under cost model, fixed assets, construction in progress, right-of-use
asset and intangible assets with definite useful life may be impaired. If there is any indication
that an asset may be impaired, the asset will be tested for impairment. Goodwill and
intangible asset with infinite useful life and development cost not reaching available for use
status, are tested for impairment annually no matter there is any indication of impairment or
not.

(1) Non-current asset impairment excluding financial asset (expect goodwill)

When testing the impairment, the group recognized the recoverable amount of an asset, which
the higher of its fair value less costs to sell and the present value of the future cash flows
expected to be derived from the asset. After impairment test, any difference of carrying
amount over its recoverable amount shall be recognized as impairment loss.

The group estimates recoverable amount based on an individual asset. If it is not possible to
estimate the recoverable amount of an individual asset, the recoverable amount is determined
on the basis of the asset groups or asset portfolio to which the asset belongs. Asset portfolio is
determined based on whether the major cash inflow generated by the asset group is
independent from the cash inflow of other assets or the asset portfolio.

Net amount which FV less disposal cost is reference to the agreed sale price or observable
market price for similar asset within the arm length transaction. When estimating the present
                                                83
value of future cash flows, management must estimate the expected future cash flows of the
asset or group of assets and select an appropriate discount rate to determine the present value
of future cash flows.

(2) Goodwill impairment

The group allocates the carrying value of the goodwill generated from the business
combination to the relevant asset group or to the relevant asset group combination which is
difficult to allocate to the relevant asset group,in a reasonable way from the date of purchase.
When conducting impairment tests on goodwill contained within the related asset group or
asset group combination, if there are signs of impairment in the asset group or asset group
combination related to goodwill, the impairment test shall firstly be conducted on the asset
group or asset group combination excluding goodwill, and the recoverable amount shall be
calculated and compared with the relevant carrying value so to recognize the corresponding
impairment loss; Then, an impairment test is conducted on the asset group or asset group
combination containing goodwill to compare the carrying value with the recoverable amount.
If the recoverable amount is lower than the carrying value, the impairment loss amount is first
offset against the carrying value of goodwill allocated to the asset group or asset group
combination, and then offset the carrying value of the asset group and asset group
combination based on the proportion of the carrying value of other assets in the asset group or
asset group combination without goodwill.

The methodology, parameters and assumptions of the goodwill impairment test are referred in
Notes VI.19.

Once the impairment loss on the assets is recognized, it can not be reversed in a subsequent
period.

20. Long-term prepaid expense

The group's long-term prepaid expense refers to landscape fees, renovation &decoration
expenses and other expenses paid and should be allocated over 1year.It will be amortized
evenly within its beneficial period. The remaining unamortized expense should be charged
into income statement if long-term prepaid expense can not bring the beneficial inflows.
Landscape fees will be amortized for 10 years and renovation& decoration fees will be
amortized for 5-10 years.

21. Employee benefits

Employee’s benefit comprises short-term benefit, post-employment benefit, termination
benefit and other long-term employee’s benefit.

Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,
labor union expense, staff training expense, during the period in which the service rendered
by the employees, the actually incurred short term employee benefits shall be recognized as
                                              84
liability and shall be recognized in P&L or related cost of assets based on benefit objective
allocated from the service rendered by employees.

Post-employment benefits include the basic pension scheme and unemployment insurance etc.
Based on the risk and obligation borne by the Company, post-employment benefits are
classified into defined contribution plan and defined benefit plan. For defined contribution
plan, liability shall be recognized based on the contributed amount made by the Company to
separate entity at the balance sheet date in exchange of employee service for the period and it
shall be recorded into current profit and loss account or relevant cost of assets in accordance
with beneficial objective.

Other long-term employee’s benefit refers to all other employee benefits other than short-term
benefit, post-employment benefit and termination benefit.

22. Provision

When the Company has transactions such as commitment to externals, discounting the trade
acceptance note, unsettled litigation or arbitration which meets the following criterion,
provision should be recognized: It is the Company's present obligation; carrying out the
obligation will probably cause the Company's economic benefit outflow; the obligation can
be reliably measured.

Provision is originally measured on the best estimate of outflow for paying off the present
obligations. When determining the best estimate, need to consider the risk, uncertainty, time
value of monetary relevant to contingent items. The group needs to review the present best
estimate and accordingly adjust the carrying value of the provision account.

23. Revenue recognition and measurement

The group recognizes revenue when it has fulfilled its contractual performance obligations, i.e.
when the customer has obtained control of the relevant goods or services. Control right of
goods or services refers to the ability to direct the use of, and obtain substantially all of the
remaining benefits from, the asset.

If the contract between the group and the customer meets the following five conditions at the
same time, the group has fulfilled the performance obligation when the customer obtains the
control of the relevant goods or services, and the revenue is recognized:

1) the parties to the contract have approved the contract and promised to fulfill their own
obligations;

2) the contract specifies the rights and obligations of parties related to the transferred
commodities;

3) the contract has explicit payment terms related to the transferred goods;

4) the contract has commercial substance, where the performance of the contract will change
                                              85
the company's future cash flow risk, time distribution or amount;

5) the consideration to which the company is entitled as a result of the transfer of goods to the
customer is likely to be recovered.

When the group transfers control of a good or service over time, it satisfies a performance
obligation and recognizes revenue over time only if one of the following criteria is met,
otherwise it shall be the performance obligation at a point in time.

(1) the customer simultaneously receives and consumes the benefits provided by the entity’s
    performance as the entity performs

(2) the group’s performance creates or enhances an asset (for example, work in progress)
    that the customer controls as the asset is created or enhanced

(3) the group’s performance does not create an asset with an alternative use to the entity and
    the entity has an enforceable right to payment for performance completed to date

(1) Revenue policy from sales

The group’s revenue mainly includes income from sale of goods and installation of the whole
set of refrigeration engineering project.

Based on the actual situation, the group recognizes the revenue as the followings;

1) Domestic sales: the sales contract with customers generally includes the performance of
obligation of transferring goods. The group recognizes the revenue at the time when the
arrival acceptance is completed by customers, having taken all followings into consideration:
present debt collection right entitled to the sales of goods, the transfer of the main risks and
rewards in the ownership of the goods, the transfer of the legal ownership entitled to the
goods, the transfer of physical assets, the acceptance of goods by customers.

2) Export sales: the group will recognize the sales revenue after completing the customs
declaration and export procedures.

Revenue from installation of the whole set of refrigeration engineering project. In the
refrigeration installation contract between the group and the customer, since the equipment
sales and installation services cannot be distinguished separately, the entire project contract is
regarded as a single performance obligation, and the revenue of the single performance
obligation is recognized at the completion of the customer acceptance. when a performance
obligation over time is satisfied, revenue shall be recognized within the contract term
according to the performance progress, which is determined by the percentage of the
cumulative actual cost to expected total contract cost. When the performance progress can not
be estimated reasonably, the group recognizes the revenue to the extent where the already
incurred cost can be compensated until the performance progress can be decided.

(2) Determining and allocating the transaction price
                                              86
If the contract includes two or more performance obligations, at the inception date of contract,
the group shall allocate the transaction price to each performance obligation identified in the
contract on a relative standalone selling price ratio basis and measure the revenue at the
allocated transaction price to each performance. If any solid evidence indicates that contract
discount is only relevant to one or some (not all) performance obligations, the discount shall
be allocated into the one or these performance obligations.

An amount of consideration can vary because of cash discounts, price guarantee. The group
determines the best estimate of the variable consideration in line with the expectation or the
amount that most probably incurred, but includes, in the transaction price, the variable
consideration not exceeding the amount that is highly unlikely to result in a material reversal
of cumulative revenue recognized when the relevant uncertainty is eliminated.

The group accounts for consideration payable to a customer as a reduction of the transaction
price and, therefore, of revenue unless the payment to the customer is in exchange for a
distinct good or service. Accordingly, the revenue shall be recognized at the later of the
revenue recognition and the consideration paid to a customer.

For sales with a right of return, the group recognizes the revenue for the consideration
expected to have the right to receive arising from transferring the goods to customers when
the customer receives the control right over the relevant goods, and recognizes the expected
refund amount as provision. At the same time, receivable of return cost, as an asset, shall be
recognized for the carrying value of the returned goods when it is expected to be transferred
less expected cost for getting it back (including decline in value) and net amount of the above
asset cost shall be carried over to the cost. At every balance sheet date, the group will reassess
the future sales returns and remeasure the above assets and liabilities.

Where a significant financing component exists in the contract, the transaction price shall be
measured at the assumed price that the payment is made by cash when the client receives the
control right of goods or services. The difference between the promised consideration and the
determined transaction price shall be amortized within the contract period using effective
interest rate, and it is the discounting rate at which the dominated price of the contract
consideration is discounted to the cash price.

According to the agreement or the regulation etc., the group provide warranty for the goods
sold and it is the quality assurance for promising the goods are in commodity with the agreed
standards and shall be accounted for as Note III、22 provision.

24. Government grants

Government grant shall be recognized only when all attached conditions are met and the grant
is possibly received. Where a government grant is in the form of a transfer of monetary asset,
it is measured at the amount received. Where a government grant is made on the basis of

                                                 87
fixed amount or conclusive evidence indicates relevant conditions for financial support are
met and expect to probably receive the fund, it is measured at the amount receivable. Where a
government grant is in the form of a transfer of non-monetary asset, it is measured at fair
value. If fair value cannot be determined reliably, it is measured at a nominal amount of
RMB1 Yuan.

Assets-related government grant is the government fund obtained by the group for the
purpose of long-term assets purchase and construction or establishment in the other forms.
Income-related grants are the grant given by the government apart from the assets-related
grants. If no grant objective indicated clearly in the government documents, the group shall
judge it according to the principle mentioned above. If the grant is difficult to be separated, it
shall be considered as income-related grant as a whole.

Assets-related government grants are recognized as deferred income, which shall be evenly
amortized to profit or loss over the useful life of the related asset. Any assets are sold,
transferred, disposed of or impaired earlier than their useful life expired date, the remaining
balance of deferred income which hasn’t been allocated shall be carried forward to the
income statement when the assets are disposed of.

Income-related government grants that is a compensation for related expenses or losses to be
incurred in subsequent periods are recognized as deferred income and credited to the relevant
period when the related expenses are incurred. Government grants relating to compensation
for related expenses or losses already incurred are charged directly to the profit or loss for the
period. Government grants related to daily business, shall be recognized as other income in
accordance with business nature or offsetting related expenses, otherwise, shall be recognized
as non-operating income or expenses.

25. Deferred tax assets and deferred tax liabilities

The deferred income tax assets or the deferred income tax liabilities should be recognized
according to the differences (temporary difference) between the carrying amount of the assets
or liabilities and its tax base and the difference between the carrying amount of tax base item
and its tax base.

Deferred tax liability shall be recognized for all taxable temporary difference apart from the
followings : (1) temporary differences arise from the initial recognition of goodwill or the
initial recognition of assets or liabilities arising from non-business combinations that do not
affect accounting profits or taxable income (or deductible losses); (2) The group is able to
control the timing of the reversal of taxable temporary differences related to investments in
subsidiaries, associates, and joint ventures, and such temporary differences are likely not to be
reversed in the foreseeable future.

The group recognizes deferred income tax assets for deductible temporary differences,

                                              88
deductible losses, and tax deductions that are likely to be obtained to offset future taxable
income, except for the following situations: (1) the initial recognition of assets or liabilities
arising from non-business combination transactions where temporary differences do not affect
accounting profits or taxable income (or deductible losses); (2) Deductible temporary
differences related to investments in subsidiaries, associates, and joint ventures that cannot
simultaneously meet the following conditions: temporary differences are likely to be reversed
in the foreseeable future, and taxable income is likely to be obtained in the future to offset
deductible temporary differences.

The group recognizes deferred income tax assets for all unused deductible losses to the extent
that there is likely to be sufficient taxable income to offset the deductible losses. The
management uses plenty of judgment to estimate the timing and amount of future taxable
income, combined with tax planning strategies, to determine the amount of deferred income
tax assets, which results in uncertainty.

On the balance sheet date, deferred income tax assets and deferred income tax liabilities are
measured at the applicable tax rate during the expected period of asset recovery or liability
settlement.

When the following conditions are met simultaneously, the group shall present the deferred
income tax assets and deferred income tax liabilities at the net amount after offsetting: The
group has the legal right to settle the current income tax assets and deferred income tax
liabilities at the net amount; Deferred income tax assets and deferred income tax liabilities are
related to the income tax levied by the same tax collection and management authority on the
same taxpayer or on different taxpayers. However, in the future, within the term when each
significant deferred income tax asset and deferred income tax liability to be reversed, the
involved taxpayers intend to settle the current income tax assets and liabilities on a net basis
or acquire assets and settle debts simultaneously.

26. Lease

(1) Lease identification

Lease: A contract, or part of a contract, that conveys the right to use an asset (the underlying
asset) for a period of time in exchange for consideration.

At inception of a contract, the group shall assess whether the contract is, or contains, a lease.
A contract is, or contains, a lease if the contract conveys the right to control the use of an or
many identified assets for a period of time in exchange for consideration.

For a contract that is, or contains several leases, the group shall separate the contract and
account each lease separately. The group shall account for each lease component separately
from non-lease components of the contract if the contract contains lease and non-lease
components. Each leasing part is accounted for according to the leasing standards, while the

                                              89
non-leasing part is accounted for according to other applicable accounting standards. If the
contract includes both leasing and non-leasing parts, the group, as the lessor, will split the
leasing and non-leasing parts and conduct accounting treatment separately. Each leasing part
will be accounted for according to the leasing standards, while the non-leasing part will be
accounted for according to other applicable accounting standards. As the lessee, the group
chooses not to separate the lease and non-lease, and joins each leased part and its non- leased
parts separately into a lease, accounting treatment shall be carried out in accordance with
leasing standards; However, if the contract includes embedded derivative instruments that
should be split, the group will not merge them with the leasing portion for accounting
treatment.

(2) As a leasee

1) Recognition

At the commencement date, the group as a lessee shall recognize a right-of-use asset and a
lease obligation except short-term lease and low value asset lease.

Right-of-use assets represents a lessee’s right to use an underlying asset for the lease term,
and is initially measured at cost.

The cost of the right-of-use asset shall comprise:

① the amount of the initial measurement of the lease liability,

② any lease payments made at or before the commencement date, less any lease incentives
received, which is the incremental cost for the lease

③ any initial direct costs incurred by the lessee which is the incremental cost

④ an estimate of costs to be incurred by the lessee in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying asset to
the condition required by the terms and conditions of the lease, unless those costs are incurred
to produce inventories. Where the group remeasures the lease liability in accordance with the
relevant provisions of the leasing standard, the carrying value of right-of-use asset is adjusted
accordingly.

The group shall follow the following principles when determining the depreciation life of the
right-of-use asset: if the ownership of the leased asset can be reasonably determined at the
end of the lease term, depreciation shall be calculated and deducted during the remaining
service life of the leased asset; Where it is not certain that the ownership of the leased asset
can be acquired at the end of the lease term, depreciation shall be calculated at the shorter of
the lease term and the remaining service life of the leased asset. The depreciation amount
shall be accounted into cost of assets or profit and loss account.

At the commencement date, a lessee shall measure the lease liability at the present value of

                                              90
the lease payments that are not paid at that date.

The lease payments included in the measurement of the lease liability comprise the following
payments for the right to use the underlying asset during the lease term that are not paid at the
commencement date: ① fixed payments (including in-substance fixed payments) less any
lease incentives receivable;② variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement date;③ the exercise price
of a purchase option if the lessee is reasonably certain to exercise that option; ④ payments
of penalties for terminating the lease, if the lessee will certainly exercise an option to
terminate the lease during the lease term;⑤ amounts expected to be payable by the lessee
under residual value guarantees.

When calculating the present value of the lease payments, interest rate implicit in the lease
shall be used. If the rate cannot be readily determined, the group shall use the lessee’s
incremental borrowing rate. Interest on the lease liability in each period during the lease term
shall be calculated based on a constant periodic rate of interest, and be recognized as in profit
or loss unless its capitalization.

After the lease commencement date, the group increases the carrying amount of lease liability
when recognizing the interest on lease liability and; decreases the carrying amount of lease
liability when making lease payment. The group remeasures the lease liability in accordance
with the present value of revised lease payment, when the followings incur: ①change of
in-substance fixed payments (subject to original discounting rate) ② change of amounts
expected to be payable under residual value guarantees(subject to original discounting rate)
③ change of an index or a rate used for future lease payments(subject to revised discounting
rate) ④ change in assessment of a buy option(subject to revised discounting rate) ⑤
change in assessment of a renew option or termination option or actual situation(subject to
revised discounting rate).

2) Short-term lease and low value asset lease

The group has chosen not to recognize the right-of-use asset and lease liability for short-term
lease (lease term less than 12 months) and low value asset (30,000 Yuan) when it is single
leased new asset. In this case, lease payment will be accounted directly in profit or loss or on
the straight-line basis in profit or loss.

3) Sales and lease back

The group, as a seller and a lease within the sales and lease back transaction, assesses whether
the transfer of the asset is a sale. If the transfer of assets is not a sale, the group shall continue
to recognize the transferred assets and at the same time recognize a financial liability equal to
the transfer income (Note VI. 34 lease). If the transfer of assets is a sale, the group shall
measure the right-of-use asset arising from the leaseback at the proportion of the previous

                                                91
carrying amount of the asset that relates to the right of use retained by the group. Accordingly,
the group shall recognize only the amount of any gain or loss that relates to the rights
transferred to the buyer-lessor.

(3) As a lessor

The group, as a lessor, classified it as a finance lease if it transfers substantially all the risks
and rewards incidental to ownership of an underlying asset unless an operating lease.

1) Financing lease

At the commencement date, the group shall recognize the lease payment receivable and
derecognize of finance lease asset. When initially measuring the lease payment receivable, net
lease investment value shall be used for the lease payment receivable.

Net lease investment value equals to the any residual value guarantees plus the PV of undue
lease receivable discounted at the interest rate implicit in the lease. The group shall recognize
interest income over the lease term based on a constant periodic rate. The variable lease
payment obtained by the group related to operating leases, which are not included in the net
lease investment, shall be accounted for in the current profit and loss when actually incurred

2) Operating lease

Lease payment received shall be recognized as lease income on a straight-line basis within the
period.

The initial direct expenses incurred by the group in relation to operating leases are capitalized
to the cost of leasing the underlying asset and are recognized in profit or loss by instalments
over the lease period on the same basis as rental income. Variable lease payments made by the
group in relation to operating leases that are not included in lease collections are recognized
in profit or loss for the period when they are actually incurred.

The group shall account for a modification to an operating lease as a new lease from the
effective date of the modification, considering any received in advance or lease payments
receivable relating to the original lease as part of the lease payments receivable for the new
lease

27. Fair value measurement

The group measures investment property, derivative financial instruments and equity
instruments at fair value at each balance sheet date. Fair value refers to the price that market
participants can receive by selling an asset or can pay for transferring a liability in an orderly
transaction that takes place on the measurement date.

Assets and liabilities measured or disclosed at fair value in the financial statements are
determined to belong to the different fair value level based on the lowest level of input values
that are significant to the fair value measurement as a whole: level 1 input is the unadjusted
                                               92
quoted price for identical asset or liability available at the active market on the measurement
date; level 2 input is the directly or indirectly observable input for relevant asset or liability
apart from level 1 input; level 3 input is the unobservable input for relevant asset or liability.

(For levels 1 and 2) For financial instruments traded in an active market, the group determines
their fair value by their active market quotes; For financial instruments that are not traded in
an active market, the group uses valuation techniques to determine their fair value, and the
valuation model used is mainly the discounted cash flow model. The input of valuation
techniques mainly includes: risk-free interest rate of debt, credit premium and liquidity
premium; estimator coefficient. and liquidity discount of equity.

(For level 3) The fair value of level 3 is determined on the basis of the group's valuation
models, such as the discounted cash flow model. The group also considers the initial
transaction price, recent transactions of the same or similar financial instruments, or full
third-party transactions of comparable financial instruments. As at 31 December 2023, level 3
financial assets measured at fair value are valued by using significant unobserved inputs such
as discount rates, but their fair value is not materially sensitive to reasonable changes in these
significant unobserved inputs.

The group uses the market approach to determine the fair value of unlisted equity investments.
This requires the group to determine comparable listed companies, select market coefficient,
estimate liquidity discounts, etc., and is therefore subject to uncertainty.




                                               93
IV. Changes in Accounting Policies, Accounting Estimates

  (1)        Change in significant accounting policies

Changes on accounting policy and reasons                                                     Memo
Since January 1, 2023, the Company has implemented the provisions of the
Interpretation of Accounting Standards for Business Enterprises No. 16 promulgated
by the Ministry of Finance, "Accounting treatment of deferred income tax related to
assets and liabilities arising from single transactions is not applicable to the initial
recognition exemption". Individual transactions to which the provision applies that
occur between the beginning of the earliest period of presentation of the financial
statements in which the provision is first applied and the date of the first
implementation are adjusted according to the provision. Taxable temporary differences
and deductible temporary differences arise in respect of lease liabilities and use rights
assets recognized at the beginning of the earliest period of presentation of the financial
statements for which the provision is first applied, as well as in respect of anticipated
liabilities related to the disposal obligation recognized and corresponding related
assets, In accordance with this provision and the provisions of Accounting Standard for
Business Enterprises No. 18 - Income Tax, the cumulative impact is adjusted to the
opening retained earnings and other related financial statement items for the earliest
period in which the financial statements are presented.



  (2)        Affected items and amount

                                                            January 1, 2023
                                                           (Jan-Dec, 2022)
          Affected items
                                            Before              Adjusted
                                                                                After adjustment
                                          adjustment             amount
deferred tax liability                     52,306,365.68           78,166.60        52,384,532.28
surplus reserve                           825,226,634.15            -4,594.76      825,222,039.39
unappropriated profit                     618,445,922.58          -65,810.05       618,380,112.53
minority interest                          54,077,970.99            -7,761.79       54,070,209.20
income tax                                  1,054,609.62         -477,793.34            576,816.28
profit or loss of minority interest         1,633,633.87             1,154.31         1,634,788.18




                                                94
  (3)          Changes in significant accounting estimates

        No.

V. Taxation

 1. The main applicable tax and rate to the Company as follows:

               Tax                          Tax base                        Tax rate
Value-added tax (VAT)            Sales revenue or Purchase           5%、6%、9%、13%、
City construction tax            Value-added tax payables                   5%、7%
Education surcharge              Value-added tax payables                      3%
Local education surcharge        Value-added tax payables                      2%
Enterprise income tax (EIT)      Current period taxable profit             15% or 25%
                                 70% of cost of own property
Real estate tax                  or revenue from leasing                  1.2% or 12%
                                 property
Land use tax                     Land using right area            Fixed amount per square meter
                                                                    According to the relevant
Other tax
                                                                 provisions of the state and local

Notes for tax entities with different EIT rate

Tax entities                                                                        EIT rate
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd                           15%
Dalian Bingshan Group Engineering Co., Ltd.                                            25%
Dalian Bingshan Group Sales Co., Ltd.                                                  25%
Dalian Bingshan Air-conditioning Equipment Co., Ltd.                                   15%
Dalian Bingshan Guardian Automation Co., Ltd.                                          15%
Dalian Bingshan-RYOSETSU Quick Freezing Equipment Co., Ltd.                            25%
Wuhan New World Refrigeration Industrial Co., Ltd.                                     15%
Dalian Bingshan Engineering & Trading Co., Ltd                                         25%
Dalian Universe Thermal Technology Co., Ltd.                                           15%
Chengdu Bingshan Refrigeration Engineering Co., Ltd.                                   25%
Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd                    25%
Wuhan Lanning Energy Technology Co., Ltd                                               25%
Sonyo Compressor (Dalian)Co., Ltd.                                                     15%
Sonyo Refrigeration System (Dalian) Co., Ltd.                                          15%
Sonyo Refrigeration (Dalian) Co., Ltd.                                                 15%




                                                 95
2. Tax preference

(1) The Company obtained the qualification of high and new technology enterprises in
December, 2023. The Certificate No. is GR202321201041. According to the tax bureau
approval, the Company can be granted for the preferential tax policy of enterprise income tax
rate of 15% from FY2023 to FY2025.

The Company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained
the qualification of high and new technology enterprises in December, 2023. The Certificate
No. is GR202321201161. According to the tax bureau approval, the Company can be granted
for the preferential tax policy of enterprise income tax rate of 15% from FY2023 to FY2025.

The Company’s subsidiary, Dalian Bingshan Guardian Automation Co., Ltd. obtained the
qualification of high and new technology enterprises on 15th December, 2021. The Certificate
No. is GR202121200765. According to the tax bureau approval, the Company can be granted
for the preferential tax policy of enterprise income tax rate of 15% from FY2021 to FY2023.

The Company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained the
qualification of high and new technology enterprises on 15th November, 2021. The Certificate
No. is GR202142001696. According to the tax bureau approval, the Company can be granted
for the preferential tax policy of enterprise income tax rate of 15% from FY2021 to FY2023.

The Company’s subsidiary, Dalian Universe Thermal Technology Co., Ltd. obtained the
qualification of high and new technology enterprises in December, 2023. The Certificate No. is
GR202321200114. According to the tax bureau approval, the Company can be granted for the
preferential tax policy of enterprise income tax rate of 15% from FY2023 to FY2025.

The Company’s subsidiary, Sonyo Compressor (Dalian)Co., Ltd. (hereinafter referred to as
“Sonyo Compressor” obtained the qualification of high and new technology enterprises in
October, 2021. The Certificate No. is GR202321201152. According to the tax bureau approval,
the Company can be granted for the preferential tax policy of enterprise income tax rate of
15% from FY2021 to FY2023.

The Company’s subsidiary, Sonyo Refrigeration System (Dalian) Co., Ltd. (hereinafter
referred to as “Sonyo Refrigeration System” obtained the qualification of high and new
technology enterprises in December, 2023. The Certificate No. is GR202321201152.
According to the tax bureau approval, the Company can be granted for the preferential tax
policy of enterprise income tax rate of 15% from FY2023 to FY2025.

The Company’s subsidiary, Sonyo Refrigeration (Dalian) Co., Ltd. (hereinafter referred to as
“Sonyo Refrigeration” obtained the qualification of high and new technology enterprises in
October, 2021. The Certificate No. is GR202121200368. According to the tax bureau approval,
the Company can be granted for the preferential tax policy of enterprise income tax rate of
15% from FY2021 to FY2023.
                                             96
 (2) According to the Announcement of the Ministry of Finance and Tax Administration on the
 accelerate VAT Deduction for advanced manufacturing enterprise (Announcement No. 43,
 2023), within the period from January 1st, 2023 to December 31st,2027, the advance enterprises
 are allowed for input VAT deduction at 5% acceleration rate during the current period. The
 Company       and   its   subsidiaries,    Dalian    Bingshan     Air-conditioning     Equipment,
 Dalian Bingshan Guardian Automation, Wuhan New World Refrigeration, Dalian Universe
 Thermal, Sonyo Compressor, Sonyo Refrigeration and Sonyo Refrigeration System enjoy the
 tax preference.

VI. Notes to Consolidated Financial Statements

 The following disclosure date on this financial statement without special indication, “opening”
 refers to January 1, 2023; “closing” refers to December 31, 2023; “current period” refers to the
 period from January 1, 2023 to December 31, 2023; and “last period” refers to the period from
 January 1, 2022 to December 31, 2022; with the currency unit RMB.

  1. Monetary fund

Item                                             Closing Balance             Opening Balance
Cash on hand                                                70,750.93                     80,702.47
Cash in bank                                          863,950,616.72                922,122,608.84
Other cash and cash equivalents                        87,018,202.46                  83,962,587.87
Total                                                 951,039,570.11              1,006,165,899.18
  Including: sum of deposits overseas                                 -                             -

    Note: within the bank deposits, $170,321,702.76 was time deposits and interest income;
Other monetary funds are bank acceptance deposit 44,200,486.65 Yuan, guarantee deposit
41,547,977.10 Yuan and migrant worker deposit 1,229,741.67 Yuan.

  2. Notes receivable

   (1) Category of notes receivable

Items                                             Closing Balance             Opening Balance
Bank acceptance notes                                  335,914,443.51               493,019,785.95
Trade acceptance notes                                   17,514,478.91                12,925,475.23
Total                                                  353,428,922.42               505,945,261.18




                                                 97
   (2) Categories according to bad debts provision method

                                                        Closing Balance
 Items                     Booking balance                     Provision
                                                                                               Booking value
                           Amount             %            Amount                   %
Bad debts
provision based on       354,313,722.61     100.00           884,800.19               0.25      353,428,922.42
group
Including: bank
                         335,914,443.51      94.81                       -               -      335,914,443.51
acceptance notes
Trade acceptance
                          18,399,279.10       5.19           884,800.19               4.81       17,514,478.91
notes
Total                    354,313,722.61     100.00           884,800.19               0.25      353,428,922.42

    (Continued)

                                                       Opening balance
Items                      Booking balance                   Provision
                                                                                             Booking value
                           Amount             %           Amount              %
Bad debts
provision based on       506,921,135.95 100.00             975,874.77        0.19             505,945,261.18
group
Including: bank
                         493,019,785.95      97.26                  -             -           493,019,785.95
acceptance notes
Trade acceptance
                          13,901,350.00       2.74         975,874.77        7.02              12,925,475.23
notes
Total                    506,921,135.95 100.00             975,874.77        0.19             505,945,261.18

  Categories based on group

                                                            Closing Balance
Items
                                   Booking balance             Provision                 Provision(%)
Bank acceptance notes                 335,914,443.51                                -                        -
Trade acceptance notes                    18,399,279.10            884,800.19                            4.81
Total                                 354,313,722.61               884,800.19                       —




                                                  98
  (3) Bad debt provision of notes receivable accrued, collected and reversed

                                           Change during the year
                        Opening
Category                                        Collected/                        Closing Balance
                        balance   Accrued                       Written-off
                                                 reversed
Bad debt
                     975,874.77                     91,074.58                 -        884,800.19
provision
Total                975,874.77                     91,074.58                 -        884,800.19

  (4) Pledged notes receivable up to the end of year.

Items                                                           Closing pledged amount
Bank acceptance notes                                                                 4,939,655.20
Total                                                                                 4,939,655.20

  (5) Notes receivable endorsed or discounted but not mature at the end of year

Item                                 Closing amount no more            Closing amount still
                                           recognized                         recognized
Bank acceptance notes                                           -                  151,261,975.36
Trade acceptance notes                                          -                      320,700.00
Total                                                           -                  151,582,675.36

  (6) Notes receivable written off: none

  3. Accounts receivable

  (1) Aging of accounts receivable

        Account Age                      Closing Balance                Opening Balance
Within 1 year(incl 1 year)                  1,075,007,175.23                    1,051,342,084.70
1-2 years                                       406,082,608.66                     271,031,036.91
2-3 years                                       207,201,791.50                     187,045,709.96
Over 3 years                                    453,345,639.16                     392,478,408.13
Of which: 3-4years                              140,135,046.24                      69,585,549.01
             4-5years                               48,619,109.18                  138,624,250.54
            Over 5 years                        264,591,483.74                     184,268,608.58
Total                                         2,141,637,214.55                    1,901,897,239.70




                                               99
   (2) Category of accounts receivable based on bad debt provision method

                                                    Closing Balance
Items                     Booking balance                  Provision
                                                                                Booking value
                         Amount             %          Amount           %
Bad debt provision
                         14,372,020.85      0.67       11,564,470.39    80.47       2,807,550.46
on individual basis
Bad debt provision
                      2,127,265,193.70     99.33      553,638,820.00    26.03   1,573,626,373.70
on group
Including: aging as
characteristics of    2,127,265,193.70     99.33      553,638,820.00    26.03   1,573,626,373.70
credit risk
Total                 2,141,637,214.55    100.00      565,203,290.39    26.39   1,576,433,924.16

     (Continued)

                                                    Opening balance
Items                      Booking balance                  Provision
                                                                                Booking value
                          Amount             %         Amount           %
Bad debt provision
                          13,181,314.30      0.69     10,348,880.50     78.51       2,832,433.80
on individual basis
Bad debt provision
                       1,888,715,925.40     99.31    481,569,916.25     25.50   1,407,146,009.15
on group
Including: aging as
characteristics of     1,888,715,925.40     99.31    481,569,916.25     25.50   1,407,146,009.15
credit risk
Total                  1,901,897,239.70    100.00    491,918,796.75     25.86   1,409,978,442.95




                                              100
     1) Bad debt provisions on individual basis

                      Opening balance                                    Closing Balance
    Name         Accounts        Provision for       Accounts          Provision for Proportion
                                                                                                        Reason
                receivable         bad debts         receivable          bad debts         (%)
                                                                                                         Full
Company                                                                                               recovery
                6,032,000.00      4,780,096.20      6,496,000.00       5,244,096.20        80.73
1                                                                                                       is not
                                                                                                      expected
Other                                                                                                Recovery
company         7,149,314.30      5,568,784.30      7,876,020.85       6,320,374.19        80.25        is not
1                                                                                                     expected
 Total         13,181,314.30 10,348,880.50 14,372,020.85 11,564,470.39                     —

     2) Bad debt provisions on group basis

                                                                  Closing Balance
                Aging                        Accounts              Provision for        Drawing proportion
                                            receivable               bad debts                   (%)
Within 1 year                             1,075,007,175.23           61,229,181.77                         5.70
1 to 2 years                                403,753,793.79           67,078,438.64                        16.61
2 to 3 years                                201,613,496.72           61,315,691.42                        30.41
3 to 4 years                                139,220,135.04           68,416,921.28                        49.14
4 to 5years                                  43,079,109.18           31,007,103.15                        71.98
Over 5 years                                264,591,483.74          264,591,483.74                       100.00
 Total                                    2,127,265,193.70          553,638,820.00                 —

     (4)      Bad debt provision of current period

                                                 Change during the year
                  Opening                                                                           Closing
Category                                         Collected/
                  balance         Accrued                       Written-off       Others            Balance
                                                 reversed
Bad debt
                491,918,796.75   68,147,779.35              -    6,532,243.60   11,668,957.89      565,203,290.39
provision
Total           491,918,796.75   68,147,779.35              -    6,532,243.60   11,668,957.89      565,203,290.39

         Note: others are from consolidation of Sonyo Refrigeration (Dalian) Co., Ltd.




                                                      101
   (4) Accounts receivable written off in current period

Item                                                              Written off amount
Receivable actually written off                                                       6,532,243.60

   (5) Top 5 receivables and contract assets

        The sum of top 5 of receivables and contract assets is 240,544,632.79Yuan, represents
 9.92% of closing balance of receivables and contract assets and bad debt provision of
 49,664,315.90Yuan shall be made.

   4. Contract asset

   (1) contract asset

                                                            Closing Balance
Items
                                     Booking balance           Provision        Carrying amount
Undue warranty                          265,440,261.85         37,369,046.20        228,071,215.65
Unsettled receivable of revenue
                                           18,840,435.97        9,834,772.91          9,005,663.06
recognized over time
Total                                   284,280,697.82         47,203,819.11        237,076,878.71

   (continued)

                                                            Opening balance
Items
                                     Booking balance           Provision        Carrying amount
Undue warranty                             210,149,278.14      31,927,565.84        178,221,712.30
Unsettled receivable of revenue
                                            61,997,091.19      14,427,927.71         47,569,163.48
recognized over time
Total                                      272,146,369.33      46,355,493.55        225,790,875.78

   (2) Significant change of the account

               Items                        Amount                         Reason
Undue warranty                              49,849,503.35       Change of consolidation scope
Unsettled receivable of revenue
                                           -38,563,500.42         Settled during the year
recognized over time
Total                                       11,286,002.93                      —




                                                 102
               (3) Category of contract asset based on bad debt provision method

                                                                   Closing Balance
                   Items                Booking balance                    Provision
                                                                                                      Booking value
                                        Amount              %          Amount            %
           Bad debt provision
                                        1,709,948.80        0.60      1,709,948.80     100.00                      -
           on individual basis
           Bad debt provision
                                      282,570,749.02    99.40        45,493,870.31       16.10        237,076,878.71
           on group
           Including: aging as
           characteristics of         282,570,749.02    99.40        45,493,870.31       16.10        237,076,878.71
           credit risk
           Total                      284,280,697.82   100.00        47,203,819.11       16.60        237,076,878.71

                 (continued)

                                                                   Opening Balance
                   Items                Booking balance                    Provision
                                                                                                       Booking value
                                        Amount              %          Amount            %
           Bad debt provision
                                        2,722,948.80        1.00      2,722,948.80     100.00                          -
           on individual basis
           Bad debt provision
                                      269,423,420.53    99.00        43,632,544.75       16.19          225,790,875.78
           on group
           Including: aging as
           characteristics of         269,423,420.53    99.00        43,632,544.75       16.19          225,790,875.78
           credit risk
           Total                      272,146,369.33   100.00        46,355,493.55       17.03          225,790,875.78

               1) Bad debt provisions on individual basis

                              Opening balance                                   Closing Balance
        Name             Accounts     Provision for     Accounts         Provision for     Proportion
                                                                                                                 Reason
                         receivable     bad debts      receivable          bad debts             (%)
Other                                                                                                        Recovery is not
                      2,722,948.80      2,722,948.80   1,709,948.80        1,709,948.80          100.00
companies2                                                                                                      expected
Total                 2,722,948.80      2,722,948.80   1,709,948.80        1,709,948.80          —                —




                                                            103
     2) Bad debt provisions on group basis

                                                          Closing Balance
               Aging                 Accounts           Provision for        Drawing proportion
                                    receivable           bad debts                      (%)
Within 1 year                       153,250,756.63        9,890,583.27                                  6.45
1 to 2 years                         71,084,892.44       10,935,114.90                              15.38
2 to 3 years                         21,276,574.60        5,611,742.31                              26.38
3 to 4 years                         27,683,262.15       11,105,880.37                              40.12
4 to 5years                           4,508,264.70        3,183,550.96                              70.62
Over 5 years                          4,766,998.50        4,766,998.50                             100.00
 Total                              282,570,749.02       45,493,870.31                   —

    (3) Bad debt provision of current period

                                                       Collected/
  Category                                Accrued                    Written-off       Others     Reason
                                                        reversed
  Undue warranty                                 - 3,755,144.26                -              -     -

  Unsettled receivable of revenue
                                                 - 1,012,572.23                -              -     -
  recognized over time
  Total                                          - 4,767,716.49                -              -     -

     5. Finance receivable

     (1) Category of finance receivable

 Items                                                Closing Balance         Opening Balance
 Bank acceptance notes                                    303,585,218.53                  58,792,792.70
 Total                                                    303,585,218.53                  58,792,792.70

     (2) Category of accounts receivable based on bad debt provision method

                                                       Closing Balance
          Items              Booking balance                   Provision
                                                                                         Booking value
                             Amount              %         Amount            %
  Bad debt provision
                         303,585,218.53      100.00                      -         -     303,585,218.53
  on group
  Including: bank
                         303,585,218.53      100.00                      -         -     303,585,218.53
  acceptance notes
  Total                  303,585,218.53      100.00                      -         -     303,585,218.53

         (Continued)


                                                 104
                                                      Opening balance
        Items               Booking balance                  Provision
                                                                                      Booking value
                           Amount              %         Amount              %
Bad debt provision
                           58,792,792.70    100.00                   -           -      58,792,792.70
on group
Including: aging as
characteristics of         58,792,792.70    100.00                   -           -      58,792,792.70
credit risk
Total                      58,792,792.70    100.00                   -           -      58,792,792.70

   (3) Pledged notes receivable up to the end of year.

Items                                                             Closing pledged amount
Bank acceptance notes                                                                99,078,000.87
Total                                                                                99,078,000.87

   6. Other receivables

           Items                  Closing Balance                        Opening Balance
Interest receivable                                      -                                       -
Dividend receivable                             14,495.00                               14,495.00
Other receivables                           41,381,728.27                            51,379,979.24
Total                                       41,396,223.27                            51,394,474.24

   6.1. Dividends receivable

   (1) Classification

Company                                       Closing Balance               Opening Balance
Wuhan Steel and Electricity Co., Ltd.                    14,495.00                       14,495.00
Total                                                    14,495.00                       14,495.00




                                                105
   6.2. Other receivables

   (1) The categories of other receivable according to nature

Items                                               Closing Balance                    Opening Balance
Receivables and payables                                      33,092,423.14                     38,051,147.58
Security deposit                                              30,103,093.46                     37,147,665.19
Petty cash                                                     3,669,152.52                      5,099,052.90
Others                                                        11,397,105.01                      6,088,641.82
Total                                                         78,261,774.13                     86,386,507.49

   (2) Aging of other receivable

                Account Age                         Closing Balance                    Opening Balance
Within 1 year(incl 1 year)                                  23,517,039.35                     27,654,438.76
1-2 years                                                      8,134,653.15                     17,231,991.92
2-3 years                                                      9,354,562.84                     26,252,562.64
Over 3 years                                                  37,255,518.79                     15,247,514.17
Of which: 3-4years                                            24,151,505.82                      7,027,188.39
               4-5years                                        6,300,480.70                      2,501,537.52
              Over 5 years                                     6,803,532.27                      5,718,788.26
Total                                                         78,261,774.13                     86,386,507.49

   (3) The bad debt provision of other receivables

                          1st stage            2nd stage                 3rd stage
                                           Expected credit
   Bad debt          Expected credit                               Expected credit loss
                                            loss within the                                         Total
   provision          loss within 12                              within the whole period
                                           whole period (no
                          months                                  (impairment incurred)
                                            impairment)
Opening
                          2,334,895.21                        -               32,671,633.04      35,006,528.25
balance
Opening
balance during               —                   —                          —                     —
the year
--transfer to the
                                       -                      -                             -                -
2nd stage
--transfer to the
                           -140,708.84                        -                    140,708.84                -
3rd stage
--reverse to the
                                       -                      -                             -                -
2nd stage
----reverse     to                     -                      -                             -                -
                                                       106
                       1st stage             2nd stage                 3rd stage
                                         Expected credit
   Bad debt        Expected credit                               Expected credit loss
                                          loss within the                                      Total
   provision        loss within 12                              within the whole period
                                         whole period (no
                       months                                   (impairment incurred)
                                          impairment)
the 1st stage
Accrued                  161,905.22                         -              1,724,045.76      1,885,950.98
Reverse                              -                      -                           -               -
Cancelation                          -                      -                           -               -
Written off               35,686.55                         -                           -      35,686.55
Other
                          23,253.18                         -                           -      23,253.18
movement
Closing
                       2,343,658.22                         -             34,536,387.64     36,880,045.86
balance

        Note: When one or more of the following situations occur, it is a "significant increase in
credit risk since the initial recognition" and is classified as the second stage: the account is older
than 1 year and the payment is overdue for more than 30 days but not more than 90 days; The
defaulting party has a negative event affecting its solvency; A significant adverse change in the
value of the collateral or in the quality of the security or credit enhancement provided by a third
party.

        When one or more of the following occurs, it is considered as a "credit impairment has
occurred" and is classified as the third stage: the payment is overdue for more than 90 days; The
defaulting party experiences significant financial difficulties or is likely to go bankrupt or other
financial restructuring; Other situations that violate contractual agreements and indicate that
there is objective evidence of impairment of financial assets.




                                                    107
   (4) Provision for bad debt

                                                  Change during the year
                 Opening                                                                             Closing
Category                             Accrued      Collected/
                  balance                                          Written-off         Others        Balance
                                                   reversed
Bad debt
                35,006,528.25     1,885,950.98                -          35,686.55    23,253.18    36,880,045.86
provision
Total           35,006,528.25     1,885,950.98                -          35,686.55    23,253.18    36,880,045.86

   (5) Other receivables written off in current period: none.

                         Item                                               Amount to be written off
         Other receivables written off actually                                                       35,686.55

   (6) Other receivables from the top 5 debtors based on closing balance

                                                                                       % of        Closing
                                                 Closing
         Name               Category                                 Aging           the total    Balance of
                                                 Balance
                                                                                       OR          Provision
                                                                    Within 1
Top 1                     Tax refund           7,718,652.20                               9.86      282,502.67
                                                                      year
Top 2                       Deposit            2,548,847.50         3-5years              3.26    1,657,427.69
Top 3                        AR/AP             2,476,894.20         2-3 years             3.16      756,691.18
                                                                    4-5years
Top 4                   Other deposit          1,150,000.00                               1.47       90,260.00
                                                                   Over 5 years
Top 5                    Bid deposit           1,000,000.00         1-2years              1.28       36,600.00
Total                           —         14,894,393.90                  —            19.03     2,823,481.54

   7. Prepayments

   (1) Aging of prepayments

                                      Closing Balance                                Opening Balance
Items                           Amount              Percentage                   Amount           Percentage
                                                       (%)                                           (%)
Within 1 year                133,068,644.50                   86.75            143,894,431.33              83.66
1 to 2 years                    12,010,696.67                     7.83          18,707,868.78              10.88
2 to 3 years                     2,578,747.06                     1.68           4,457,439.74               2.59
Over 3 years                     5,730,572.25                     3.74           4,931,728.27               2.87
Total                        153,388,660.48                100.00              171,991,468.12           100.00

   (2) Prepayments from the top 5 debtors based on closing balance

        The sum of top 5 of prepayment is 65,324,752.92 Yuan, represents 42.60% of closing
balance of prepayment.

                                                     108
  8. Inventories

  (1) Categories of inventories

                                                        Closing Balance
             Item
                                    Book value       Provision for decline    Net book value
Cost to fulfill the contract       657,703,661.17           15,425,401.03      642,278,260.14
Finished goods                     524,399,789.91           47,832,216.91      476,567,573.00
Raw materials                      282,868,685.78           31,011,520.30      251,857,165.48
Working in progress                211,744,888.60           10,130,805.54      201,614,083.06
Self-manufactured
                                    35,347,357.53                         -      35,347,357.53
semi-finished products
Materials on consignment
                                    21,317,653.86               60,394.18        21,257,259.68
for further processing
Goods on transit                      8,313,813.04             821,759.89         7,492,053.15
Properties written off debtors        2,708,646.00           1,149,186.00         1,559,460.00
Low-value consumable                   166,267.10                         -        166,267.10
Total                             1,744,570,762.99         106,431,283.85     1,638,139,479.14

     (Continued)

                                                       Opening Balance
             Item
                                    Book value       Provision for decline    Net book value
Cost to fulfill the contract       518,190,428.65           24,029,331.96      494,161,096.69
Finished goods                     358,865,793.97           20,733,013.07      338,132,780.90
Raw materials                      257,330,026.33           17,594,044.66      239,735,981.67
Working in progress                219,325,436.31            7,091,948.88      212,233,487.43
Goods on transit                    64,331,292.17              463,920.35        63,867,371.82
Self-manufactured
semi-finished products              30,898,915.81                         -      30,898,915.81
Materials on consignment
for further processing              15,134,850.12              540,289.54        14,594,560.58
Properties written off debtors       2,708,646.00            1,149,186.00         1,559,460.00
Low-value consumable                   161,125.34                         -        161,125.34
Total                             1,466,946,514.70          71,601,734.46     1,395,344,780.24




                                              109
               (2) Provision for decline in the value of inventories

                                                     Increase                               Decrease
                     Opening                                                                                           Closing
   Item                                                         Others            Reverse/             Others
                     Balance               Accrual                                                                     Balance
                                                           transferred         Written- off        transferred
Raw
                    17,594,044.66      -2,603,790.07       22,790,431.86          6,769,166.15                   -    31,011,520.30
materials
WIP                  7,091,948.88          3,038,856.66                    -                   -                 -    10,130,805.54
Finished
                    20,733,013.07    16,562,416.248        20,518,964.39          9,982,176.79                   -    47,832,216.91
goods
Cost to fulfill
                    24,029,331.96           841,412.60     11,574,524.36       21,019,867.89                     -    15,425,401.03
the contract
Materials on
consignment
                      540,289.54           -479,895.36                     -                   -                 -        60,394.18
for further
processing
Goods on
                      463,920.35            287,037.52           70,802.02                     -                 -      821,759.89
transit
Properties
written off          1,149,186.00                      -                   -                   -                 -     1,149,186.00
debtors
Total               71,601,734.46      17,646,037.59       54,954,722.63       37,771,210.83                     -   106,431,283.85

               Accrual for provision for decline in the value of inventories

                                                   Basis for net realizable value                      Reasons for
            Item
                                                            recognition                            reverse/write-off
            Raw materials                       The amount deducting the expected                         Sold
            WIP                                  cost to product completion, selling                      Sold
            Finished goods                       expense and relative tax from the                        Sold
            Cost to fulfill the contract               estimated selling price.                           Sold

               9. Non-current asset due within one year

            Item                                                   Closing Balance                 Opening Balance
            Long term receivable due within 1 year                                      -                  15,715,631.52
            Total                                                                       -                  15,715,631.52

               10. Other current assets

            Item                                                         Closing Balance            Opening Balance

                                                                  110
Input VAT to be deducted                                 18,112,002.39            12,825,675.49
Contract acquisition cost                                 4,532,291.00                         -
Prepaid income tax presented at net amount
                                                          3,216,096.82             9,010,312.91
after offsetting
Prepaid VAT                                                198,895.83             11,646,669.59
Prepaid expenses                                            15,056.29                16,919.61
Total                                                    26,074,342.33            33,499,577.60

  11. Long term receivable

  (1) Details

                                             Closing Balance
                                                                                  Discounted
Item                             Carrying
                                                      Provision Book value           rate
                                  amount
Lease premium                                 -              -            -                    -
---Unrealized financing income                -              -            -                    -
Goods sold by installments                    -              -            -                    -
Total                                         -              -            -                    -

     (Continued)

                                                  Opening Balance
                                                                                   Discounted
Item                                Carrying
                                                        Provision    Book value        rate
                                     amount
Lease premium                                     -              -            -                -
---Unrealized financing income                    -              -            -                -
Goods sold by installments         5,591,380.90 428,922.00 5,162,458.90                 4.75%
Total                              5,591,380.90 428,922.00 5,162,458.90                       —




                                         111
   (2) Category of long-term receivable based on bad debt provision method

                                                    Closing Balance
        Items             Booking balance                  Provision
                                                                                 Booking value
                         Amount             %          Amount            %
Bad debt provision
                                     -          -                    -       -                -
on group
Including: bank
                                     -          -                    -       -                -
acceptance notes
Total                                -          -                    -       -                -

     (Continued)

                                                    Opening balance
        Items             Booking balance                   Provision
                                                                                 Booking value
                          Amount             %         Amount            %
Bad debt provision
                           5,591,380.90   100.00        428,922.00       7.67      5,162,458.90
on group
Including: aging as
characteristics of         5,591,380.90   100.00        428,922.00       7.67      5,162,458.90
credit risk
Total                      5,591,380.90   100.00        428,922.00       7.67      5,162,458.90




                                             112
     1) The bad debt provision under expected credit loss model

                          1st stage                 2nd stage                       3rd stage
   Bad debt            Expected credit        Expected credit loss        Expected credit loss
                                                                                                           Total
   provision            loss within 12       within the whole period     within the whole period
                           months               (no impairment)          (impairment incurred)
Opening
                            428,922.00                               -                               -   428,922.00
balance
Opening
balance during                 —                      —                              —                   —
the year
--transfer to the
                                         -                           -                               -             -
2nd stage
--transfer to the
                                         -                           -                               -             -
3rd stage
--reverse to the
                                         -                           -                               -             -
2nd stage
----reverse     to
                                         -                           -                               -             -
the 1st stage
Accrued                                  -                           -                               -             -
Reverse                     210,600.00                               -                               -   210,600.00
Cancelation                              -                           -                               -             -
Written off                              -                           -                               -             -
Other
                           -218,322.00                               -                               - -218,322.00
movement
Closing balance                          -                           -                               -             -

     (3) Bad debt provision of long-term receivable for the year

                                                     Change during the year
                     Opening                                                                             Closing
Category                              Accrued       Collected/
                     balance                                      Written-off            Others          Balance
                                                    reversed
Bad debt
                     428,922.00                 -   210,600.00                  -      -218,322.00                 -
provision
Total                428,922.00                 -   210,600.00                  -      -218,322.00                 -




                                                         113
             BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD
             Notes to financial statements
             January 1, 2023 to December 31, 2023
             (The currency is in RMB Yuan except otherwise indicated)
             (English translation for reference only)
             12.Long-term equity investments

                                                                                               Increase/Decrease
                                                                           Gains and                                                            Provision
                        Beginning                                             losses          Adjustment of                   Cash bonus           for                                        Provision for
     Investee                                                              recognized             other        Change of       or profits      impairment                  Ending balance
                         balance          Increased       Decreased                                                                                          Others                           impairment
                                                                            under the         comprehensive   other equity   announced to         of the
                                                                             equity              income                          issue           current
                                                                             method                                                              period
Associates                          —            —                  —                —              —             —               —            —            —                 —               —
Dalian Honjo
Chemical Co., Ltd
                           9,819,096.80               -                -       -594,472.68                -              -     -1,050,000.00            -   1,717,629.40       9,892,253.52               -
Keihin-Grand Ocean
Thermal Technology        60,089,313.51               -                -       -509,338.51                -              -     -2,000,000.00            -             -       57,579,975.00               -
(Dalian)Co.,Ltd.
Dalian Fuji
Bingshan Vending         111,101,339.93               -                -     -43,490,921.84               -              -                 -            -             -       67,610,418.09               -
Machine Co., Ltd.
MHI Bingshan
Refrigeration             15,401,109.10               -                -      1,142,546.44                -              -                 -            -             -       16,543,655.54               -
(Dalian) Co.,Ltd.
Dalian Fuji
Bingshan Vending
Machine Sales Co.,
                                      -               -                -                  -               -              -                 -            -             -                   -               -
Ltd
Jiangsu Jingxue
Insulation
Technology Co.,Ltd
                         140,124,248.76               -                -      5,840,827.15                -              -     -1,610,172.00            -             -      144,354,903.91               -
(N4)
Dalian Bingshan
Metal Technology         175,313,807.46               -                -     31,071,464.97                -              -    -33,134,422.30            -             -      173,250,850.13               -
Co.,Ltd.




                                                                                                  114
             BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD
             Notes to financial statements
             January 1, 2023 to December 31, 2023
             (The currency is in RMB Yuan except otherwise indicated)
             (English translation for reference only)
                                                                                          Increase/Decrease
                                                                      Gains and                                                            Provision
                     Beginning                                           losses          Adjustment of                   Cash bonus           for                                        Provision for
        Investee                                                      recognized             other        Change of       or profits      impairment                  Ending balance
                      balance         Increased       Decreased                                                                                         Others                           impairment
                                                                       under the         comprehensive   other equity   announced to         of the
                                                                        equity              income                          issue           current
                                                                        method                                                              period
Dalian Bingshan
Group Huahuida
Financial Leasing
                      45,603,876.95               -               -      1,197,707.15                -              -      -751,127.55             -             -       46,050,456.55               -
Co., Ltd
Wuhan Sikafu
Power Control          5,534,979.43               -               -        457,455.33                -              -                -             -             -        5,992,434.76               -
Equipment Co., Ltd
Total                562,987,771.94               -               -      -4,884,731.99               -              -    -38,545,721.85            -   1,717,629.40     521,274,947.50               -




                                                                                             115
13.Other non-current financial assets

Item                                          Closing Balance              Opening Balance
Financial assets classified as FVTPL                 164,024,771.63              149,950,861.31
Including: equity instruments                        164,024,771.63              149,950,861.31
Total                                                164,024,771.63              149,950,861.31

14. Investment property

  (1) Investment property measured as cost model

                                         Property&
                   Item                                       Land-use-rights        Total
                                          building
 I. Initial cost                              —                    —                —
 1. opening balance                       230,594,490.07         26,094,438.38   256,688,928.45
 2. addition                               15,579,127.78                     -    15,579,127.78
 (1) FA\transferred from CIP               15,579,127.78                     -    15,579,127.78
 3. decrease                                              -                  -                -
 4. closing balance                       246,173,617.85         26,094,438.38   272,268,056.23
 II. Accumulated depreciation                 —                    —                —
 1. opening balance                       128,527,417.44         12,828,592.81   141,356,010.25
 2. addition                                6,800,475.72           521,888.76      7,322,364.48
 (1) accrued/amortization                   5,300,697.15           521,888.76      5,822,585.91
 (2) FA\transferred from CIP                1,499,778.57                     -     1,499,778.57
 3. decrease                                              -                  -                -
 4. closing balance                       135,327,893.16         13,350,481.57   148,678,374.73
 III. Impairment reserve                      —                    —                —
 1. opening balance                                       -                  -                -
 2. addition                                              -                  -                -
 3. decrease                                              -                  -                -
 4. closing balance                                       -                  -                -
 IV. Book value                               —                    —                —
 1. Closing book value                    110,845,724.69         12,743,956.81   123,589,681.50
 2. Opening book value                    102,067,072.63         13,265,845.57   115,332,918.20

  (2) Investment property without ownership certificate

Item                      Book value                              Reason


                                               116
                                           Because the land use right and the plant’s ownership
                                           belong to different person, the deed of the plant was
Plant                        12,141,047.62 not obtained. In 2023, the land use right is obtained,
                                           the certificate of the plant ownership is in progress
                                             The documents are not ready in full, the certificate of
Rihang Apartment                1,958,830.20 the building ownership can not be dealt with

   15. Fixed assets

Items                                        Closing Book Value                     Opening Book Value
Fixed asset                                           1,291,851,402.46                       1,229,029,368.93
Fixed asset disposal                                                        -                                  -
Total                                                 1,291,851,402.46                       1,229,029,368.93

   (1) Fixed assets detail

                       Property&         Machinery          Transportation         Other
Item                                                                             equipment            Total
                        buildings         equipment         equipment

I. Initial cost            —                 —                 —                  —                —

1.Opening
                      833,131,692.61    1,700,788,050.58    21,850,467.55       215,907,705.08   2,771,677,915.82
balance

2. Increase           169,961,408.00     206,761,056.32      6,124,546.45        43,911,382.93    426,758,393.70

(1) Purchase           13,060,683.47       3,476,651.96        363,268.65         4,559,341.33     21,459,945.41

(2) Transferred

from
                        2,439,313.50      49,253,798.47        413,539.84        16,259,558.57     68,366,210.38
construction-in-pr

ogress

(3) Acquired from

business              154,461,411.03     134,755,852.34      5,347,737.96        23,092,483.03    317,657,484.36

combination

(4) financial lease                 -     19,274,753.55                 -                    -     19,274,753.55

3. Decrease            18,330,807.67      46,685,982.39      1,560,741.04        11,370,982.59     77,948,513.69

(1) Disposal            2,999,204.64      46,685,982.39      1,560,741.04        11,370,982.59     62,616,910.66

(2) transferred int

investment             15,331,603.03                   -                -                    -     15,331,603.03

property

4.Closing balance     984,762,292.94    1,860,863,124.51    26,414,272.96       248,448,105.42   3,120,487,795.83

II. Accumulated
                           —                 —                 —                  —                —
depreciation

1.Opening
                      244,228,011.91    1,120,019,881.71    15,419,223.76       149,998,682.42   1,529,665,799.80
balance


                                                      117
                         Property&           Machinery         Transportation      Other
  Item                                                                           equipment            Total
                          buildings          equipment         equipment

  2. Increase           101,507,446.57       198,882,895.04     4,931,531.13     30,334,072.95    335,655,945.69

  (1) Accrued            24,470,757.08        91,543,120.54     1,570,559.26     12,218,112.81    129,802,549.69

  (2) Acquired

        from
                         77,036,689.49       101,969,284.95     3,360,971.87     18,115,960.14    200,482,906.45
        business

        combination

  (3) financial lease                 -        5,370,489.55                -                 -       5,370,489.55

  3. Decrease             2,686,973.65        37,637,882.98     1,423,918.35     10,341,217.21     52,089,992.19

  (1) Disposal            1,187,195.08        37,637,882.98     1,423,918.35     10,341,217.21     50,590,213.62

  (2) transferred int

  investment              1,499,778.57                    -                -                 -       1,499,778.57

  property

  4.Closing balance     343,048,484.83     1,281,264,893.77    18,926,836.54    169,991,538.16   1,813,231,753.30

  III. Impairment
                             —                  —                 —               —                —
  reserve

  1.Opening
                           201,250.96          8,839,885.62       286,519.26      3,655,091.25     12,982,747.09
  balance

  2. Increase             1,960,721.36         3,258,013.57                -       414,884.85        5,633,619.78

  (1)Acquired from

  business                1,960,721.36         3,258,013.57                        414,884.85        5,633,619.78

  combination

  3. Decrease             1,036,065.45         2,088,217.14                -         87,444.21       3,211,726.80

  (1) Disposal            1,036,065.45         2,088,217.14                -         87,444.21       3,211,726.80

  4.Closing balance       1,125,906.87        10,009,682.05       286,519.26      3,982,531.89     15,404,640.07

  IV.Book value              —                  —                 —               —                —

  1.Closing book
                        640,587,901.24       569,588,548.69     7,200,917.16     74,474,035.37   1,291,851,402.46
  value

  2.Opening book
                        588,702,429.74       571,928,283.25     6,144,724.53     62,253,931.41   1,229,029,368.93
  value

       (2) Fixed assets without ownership certificate

Item                                      Book value                                Reason




                                                         118
                                                              Up to December 31,2023, sum of net book value
                                                              of the buildings without ownership certificate is
                                                              30,753,216.16       Yuan,    they      are     all
                                                              self-constructed buildings, which is the property
        Self -constructed buildings             30,753,216.16
                                                              of Sonyo Compressor (Dalian)Co., Ltd.
                                                              Because the land right where the buildings stand
                                                              on are not obtained, ownership certificate of the
                                                              buildings are not ready.



               16. Construction-in-progress

           Item                                       Closing book value             Opening book value
           Construction-in-progress                            114,801,351.21                   115,577,902.54
           Construction materials                                            -                                 -
           Total                                                114,801,351.21                  115,577,902.54

               (1) Construction-in-progress details

                                      Closing balance                                     Opening balance
        Item
                      Book balance        Provision     Book Value       Book balance        Provision       Book value
Buildings &
reconstruction          26,282,803.78             -      26,282,803.78    24,796,146.56                  -    24,796,146.56
Improvement of
machinery               83,833,793.88             -      83,833,793.88    82,341,565.62                  -    82,341,565.62
Software of
intelligent              4,684,753.55             -       4,684,753.55     3,575,525.17                  -     3,575,525.17
manufacture
Power generation
                                      -           -                  -     9,164,665.19     4,300,000.00       4,864,665.19
project
Total                  114,801,351.21             -     114,801,351.21   119,877,902.54     4,300,000.00     115,577,902.54




                                                             119
              (2) Change in the significant construction in progress

                                                                                           Decrease
                              Opening                                           Transfer to                                       Closing
        Name                                         Increase                                                 Other
                              balance                                       FA/ Intangible                                        balance
                                                                                                            decrease
                                                                                  assets
Buildings &
reconstruction               24,796,146.56           2,512,958.85                  3,040,744.66               247,524.75         24,020,836.00
Improvement of
machinery                    82,341,565.62       36,587,416.93                    58,254,020.37             1,026,548.66         59,648,413.52
Software of
intelligent                   3,575,525.17           1,230,929.72                                  -        4,806,454.89                       -
manufacture
Power generation
project                       9,164,665.19                            -            4,864,665.19             4,300,000.00                       -
Total                       119,877,902.54       40,331,305.50                    66,159,430.22            10,380,528.30         83,669,249.52

                 (Continued)

                                        Percent of                                                      Including:
                                       investment         Progress               Accumulated           accumulate          Interest
                                                                                                                                       Source of
    Name                Budget           against             of                   capitalized          d capitalized    capitalization
                                                                                                                                         funds
                                         budget         construction                interest            interest of       Rate (%)
                                           (%)                                                           the year
Buildings &                                                                                                                               Self-
                    29,847,212.07            80.48                   80.48                     -                    -              -
reconstruction                                                                                                                         financing
Improvement                                                                                                                               Self-
                    62,164,977.27            95.95                   95.95                     -                    -              -
of machinery                                                                                                                           financing
Software of
intelligent             3,610,000.00             -                          -                  -                    -              -      —
manufacture
Power
generation              9,164,665.19             -                          -                  -                    -              -      —
project
Total              104,786,854.53           —                  —                            —                   —             —      —


              (3) Impairment provision

                                  Opening                                                      Closing
                 Item                            Increase             Decrease                                           Reason
                                  balance                                                      balance
         Power
         generation              4,300,000.00              - 4,300,000.00                                      -            —
         project
         Total                   4,300,000.00               -        4,300,000.00                              -            —




                                                                          120
    17. Right-of-use assets

                              Property/                       Transportation       Electronic
Item                                          Machinery                                             Land use right         Total
                              buildings                         equipment          equipment
I. Initial cost                   —             —                   —              —                 —                 —
1.Opening balance             12,258,253.25   22,042,380.89           334,540.86     194,322.58         7,945,762.91     42,775,260.49
2. Increase                   17,260,086.14               -                    -     802,669.35         7,579,035.02     25,641,790.51
(1) lease in                  17,260,086.14               -                    -     802,669.35                      -   18,062,755.49
(2) business combination                  -               -                    -                -       7,579,035.02      7,579,035.02
3. Decrease                    7,217,240.70   20,541,973.76           334,540.86                -        121,248.96      28,215,004.28
(1) Disposal                   7,217,240.70    1,267,220.21           334,540.86                -        121,248.96       8,940,250.73
(2) transferred into FA                   -   19,274,753.55                    -                -                    -   19,274,753.55
4.Closing balance             22,301,098.69    1,500,407.13                    -     996,991.93        15,403,548.97     40,202,046.72
II. Accumulated
                                  —             —                   —              —                 —                 —
amortization
1.Opening balance              2,561,983.47    7,244,798.14           223,027.24      99,228.48         1,704,560.90     11,833,598.23
2. Increase                    8,604,790.32    1,263,779.95           111,513.60      62,992.06         2,139,878.33     12,182,954.26
(1) Accrued                    8,604,790.32    1,263,779.95           111,513.60      62,992.06         1,297,763.28     11,340,839.21
(2) business combination                  -               -                    -                -         842,115.05       842,115.05
3. Decrease                    6,076,357.87    7,870,831.42           334,540.84                -          80,832.72     14,362,562.85
(1) Disposal                   6,076,357.87    1,188,837.41           334,540.84                -          80,832.72      7,680,568.84
(2) transferred into FA                   -    6,681,994.01                    -                -                    -    6,681,994.01
4.Closing balance              5,090,415.92     637,746.67                     -     162,220.54         3,763,606.51      9,653,989.64


                                                                121
                          Property/                       Transportation       Electronic
Item                                      Machinery                                             Land use right         Total
                          buildings                         equipment          equipment

III. Impairment reserve       —             —                   —              —                 —                 —

1. Opening balance                    -               -                    -                -                    -               -
2. Increase                           -               -                    -                -                    -               -
3. Decrease                           -               -                    -                -                    -               -
4.Closing balance                     -               -                    -                -                    -               -
IV. Book value                —             —                   —              —                 —                 —
1. Closing book value     17,210,682.77     862,660.46                     -     834,771.39        11,639,942.46     30,548,057.08
2. Opening book value      9,696,269.78   14,797,582.75           111,513.62      95,094.10         6,241,202.01     30,941,662.26




                                                            122
       18. Intangible assets
                                                                        Non-
Item                           Land use right          Patent                         Others           Total
                                                                       Patent
I. Initial cost                     —                   —              —             —              —

1.Opening balance               173,151,420.72      17,630,188.82    5,773,680.00   59,376,795.82   255,932,085.36

2. Increase                      67,754,316.68                   -              -   17,330,846.32    85,085,163.00

(1) Purchase                     15,106,584.15                   -              -    4,347,395.91    19,453,980.06

(2) Transferred from
                                                -                -              -     278,761.06       278,761.06
construction-in-progress

(3) increase via merge           52,647,732.53                   -              -   12,704,689.35    65,352,421.88

3. Decrease                                     -                -              -    2,458,296.66     2,458,296.66

(1) Disposal                                    -                -              -    2,458,296.66     2,458,296.66

4.Closing balance               240,905,737.40      17,630,188.82    5,773,680.00   74,249,345.48   338,558,951.70

II. Accumulated
                                    —                   —              —             —              —
amortization

1.Opening balance                47,596,987.88       9,040,676.05    4,273,700.00   26,944,001.36    87,855,365.29

2. Increase                      24,304,389.58       1,429,512.20     500,008.00    15,889,731.72    42,123,641.50

(1) Accrued                       6,448,992.14       1,429,512.20     500,008.00     5,192,180.77    13,570,693.11

(2) Increase from merger         17,855,397.44                   -              -   10,697,550.95    28,552,948.39

3. Decrease                                     -                -              -    1,986,197.48     1,986,197.48

(1) Disposal                                    -                -              -    1,986,197.48     1,986,197.48

4.Closing balance                71,901,377.46      10,470,188.25    4,773,708.00   40,847,535.60   127,992,809.31

III. Impairment
                                    —                   —              —             —              —
provision

1. Opening balance                              -                -              -               -                -

2. Increase                                     -                -              -      50,980.35         50,980.35


(1) Increase from merger                        -                -              -      50,980.35         50,980.35

3. Decrease                                     -                -              -      38,999.18         38,999.18

(1) Disposal                                    -                -              -      38,999.18         38,999.18

4.Closing balance                               -                -              -       11,981.17        11,981.17

IV. Book value                      —                   —              —             —              —

1. Closing book value           169,004,359.94       7,160,000.57     999,972.00    33,389,828.71   210,554,161.22

2. Opening book value           125,554,432.84       8,589,512.77    1,499,980.00   32,432,794.46   168,076,720.07

        19. Goodwill

       (1) Original cost of goodwill

                                                           123
                                            Increased during          Decreased during
                                               current year             current year
                           Opening
        Name                               Enterprises                                          Closing Balance
                           Balance
                                             merger        Other     Disposal       Other
                                            increase
Sonyo Compressor
(Dalian)Co., Ltd         240,922,872.80                -         -              -           -    240,922,872.80
Sonyo Refrigeration
(Dalian) Co., Ltd.(N1)                -    38,056,663.52         -              -           -     38,056,663.52
Sonyo Refrigeration
System (Dalian) Co.,       5,671,836.12                -         -              -           -      5,671,836.12
Ltd.
Dalian Universe
Thermal Technology         1,440,347.92                -         -              -           -      1,440,347.92
Co., Ltd.
Dalian Bingshan
Group Engineering           310,451.57                 -         -              -           -        310,451.57
Co., Ltd
         Total           248,345,508.41    38,056,663.52         -              -           -    286,402,171.93

  (2) Goodwill impairment provision

     In the year 2015, the book value of equity investment of Dalian Universe Thermal Technology
Co., Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset.
The difference between the book value of equity investment of 48, 287,589.78 Yuan and the
identifiable net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd of
46,847,241.86 Yuan on the acquisition date of July 31st ,2015 is recognized as goodwill of
1,440,347.92 Yuan on The Company consolidated financial report at the end of the year.

     In the year 2016, Dalian Bingshan Group Engineering Co., Ltd purchases shares of Dalian
Bingshan Baoan Leisure Industry Co., Ltd and gains control. The transferred price is based on the
net asset of Dalian BingshanBaoan Leisure Industry Co., Ltd on June 30th, 2016. Negotiated with
Dalian Bingshan Baoan Leisure Industry Co., Ltd’s shareholder Baoan Water Project (China)
Limited Company, the transfer price is the combination cost on the purchasing date which is
5,359,548.42 Yuan, the fair value of proportion of Dalian BingshanBaoan Leisure Industry
Company’s identifiable net asset is 5,049,096.85 Yuan on the purchasing day, therefore, goodwill is
310,451.57Yuan on the purchasing date. Dalian Bingshan Group Engineering Co., Ltd absorbed
Dalian Bingshan Baoan Leisure Industry Co., Ltd in 2019.

     In 2022, the Company purchased 60% of the shareholdings of Sonyo Compressor (Dalian)Co.,
Ltd from Sanyo Electric (China)Co., Ltd, and negotiated with Sanyo Electric (China)Co., Ltd to
determine the share transfer consideration of 929,148,000.00 Yuan. After the transaction, Sonyo
Compressor (Dalian)Co., Ltd became a subsidiary. This transaction is a business combination not
under same control, cost of combination is the FV of previous shareholdings on acquisition date plus
60% shareholdings acquisition consideration, which is 1,548,580,000Yuan in total. Goodwill of
240,922,872.80 Yuan is recognized for the difference between the share of FV of net identifiable
asset of acquiree, 1,307,657,127.20Yuan and cost of combination on acquisition date.


                                                124
     In 2022, the Company purchased 30% of the shareholdings of Sonyo Refrigeration System
(Dalian) Co., Ltd. from Panasonic Corporation of china Co., LTD and 25% shareholdings of Sonyo
Refrigeration System (Dalian) Co., Ltd from Panasonic Appliances cold Chain (Dalian)Co.Ltd. The
negotiated share transfer consideration of 81,735,060.00 Yuan. After the transaction, Sonyo
Compressor (Dalian)Co., Ltd became a subsidiary. This transaction is a business combination not
under same control, cost of combination is the FV of previous shareholdings on acquisition date plus
55% shareholdings acquisition consideration, which is 111,456,900.00Yuan in total. Goodwill of
5,671,836.12 Yuan is recognized for the difference between the share of FV of net identifiable asset
of acquire, 105,785,063.87Yuan and cost of combination on acquisition date.

     In 2023, the Company purchased 40% of the shareholdings of Sonyo Refrigeration (Dalian) Co.,
Ltd. from Panasonic Corporation of China Co., LTD and 60% shareholdings of Sonyo Refrigeration
(Dalian) Co., Ltd from Sanyo Electric (China)Co., Ltd. This transaction is a business combination
not under same control, cost of combination is the consideration of 145,285,500.00 Yuan for share
transfer. Goodwill of 38,056,663.52Yuan is recognized for the difference between the share of FV of
net identifiable asset of acquire. 107,228,836.48Yuan and cost of combination on acquisition date.

     The book value of goodwill from business combination shall be allocated into the relevant asset
group using the reasonable method since acquisition date, and be tested for impairment on related
asset groups containing goodwill by professional appraisal companies or use evaluation models to
predict the recoverable amount of related asset groups containing goodwill in accordance with the
present value of future cash flows including gross profit rate, sales growth rate (1%-8%), discount
rate(10.74%-11.62%) and other parameters in the next 5 years. No goodwill impairment has been
found when the recoverable amount of asset group for testing is higher than its book value.




                                                 125
           20. Long-term unamortized expense

                                    Opening                                                 Other              Closing
  Item                                                Increase            Amortization
                                    Balance                                                Decrease            balance
Greenland of new factory            3,940,176.58                  -         892,115.52                -       3,048,061.06
Employee’s dormitory use
                                    1,596,735.42                  -         138,478.32                -       1,458,257.10
right
Membership fee for golf              390,500.00                   -          16,500.00                -         374,000.00
Renovation and rebuilding            339,641.30                   -         197,549.97                -         142,091.33
Amortization of instruments          219,513.62      389,380.61             293,657.62                -         315,236.61
Technology entrance fee of
                                                -       16,016.35             7,340.85                -           8,675.50
cold and heat machinery
Total                               6,486,566.92     405,396.96            1,545,642.28               -       5,346,321.60

           21. Deferred tax assets and deferred tax liabilities

           (1) Deferred tax assets without offsetting

                                       Closing balance                                Opening balance
        Item                      Deductible       Deferred tax                 Deductible
                                                                                                 Deferred tax assets
                              temporary difference    assets                temporary difference
        Provision for
        credit impairment        445,951,688.75      81,048,834.24              383,685,092.04        70,892,192.53
        Provision for
        impairment of            153,519,850.70      23,185,410.37              110,205,587.05        18,013,430.31
        assets
        Lease liability            52,799,814.74        8,006,670.79            18,901,886.18             2,883,573.82
        FA depreciation            48,341,817.47        7,251,272.60             35,600,567.62            5,340,085.14
        Accrued sales
        discount                   17,125,319.07        2,568,797.86             13,744,913.65            2,061,737.05
        Unrealized profit
        from internal              13,034,503.47        1,955,175.52             13,034,503.47            1,955,175.52
        transaction
        Unrealized
        revenue                    11,170,890.18        2,792,722.55                           -                     -
        Provision                   4,544,802.83         714,830.47              16,786,967.43            2,518,045.11
        Safety cost                  449,375.00           67,406.25                            -                     -
        Deductible loss                         -                     -           9,991,507.80            1,498,726.17
        Others                      1,138,175.07         170,726.26                 845,210.65              126,781.60
        Total                    748,076,237.28     127,761,846.91             602,796,235.89       105,289,747.25




                                                         126
    (2) Deferred tax liabilities without offsetting

                                       Closing balance                           Opening balance
Item                              Taxable                                    Taxable
                                                 Deferred tax                              Deferred tax
                                temporary                                  temporary
                                                   liabilities                               liabilities
                                 difference                                 difference
Revaluation increase in
business combination
asst not under same           253,978,835.91       38,096,825.39       211,352,103.77      31,702,815.57
control
Change on FV of other
non-current financial         151,430,911.13       22,714,636.67       137,357,000.73      20,603,550.11
assets
FA depreciation                44,655,750.06          6,698,362.51        46,545,245.48     6,981,786.82
Use right of asset             48,864,566.94          7,414,624.88        19,380,755.68     2,961,740.42
Total                         498,930,064.04       74,924,449.45       414,635,105.66      62,249,892.92

    (3) Net deferred tax asset or liability

                                                                     Offset
                  Offset amount at     Closing balance of        amount at the      Opening balance of
Item
                     the year-end       net of DTA/DTL           beginning of        net of DTA/DTL
                                                                     the year
Deferred tax
                      14,112,987.38           113,648,859.53      9,865,360.64             95,424,386.61
assets
Deferred tax
                      14,112,987.38            60,811,462.07      9,865,360.64             52,384,532.28
liabilities

    (4) Unrecognized deferred tax assets details

Item                                           Closing balance                   Opening balance
Deductible temporary difference                          227,656,543.59                   173,990,137.06
Deductible loss                                          553,968,553.34                   310,513,803.17
Total                                                    781,625,096.93                   484,503,940.23




                                                   127
     (5) Unrecognized deductible loss of deferred tax assets expired years

Year                              Closing balance         Opening balance                   Notes
2024                                   7,735,166.14             7,735,166.14                    —
2025                                   8,950,922.50             8,950,922.50                    —

2026                                  54,629,003.37            54,629,003.37                    —

2027                                  67,364,986.52            67,240,033.97                    —

2028                                  55,969,301.70             13,111,421.07                   —

2029                                  39,791,411.14            45,365,135.77                    —

2030                                   7,689,545.97            10,574,799.57                    —

2031                                 126,221,649.87            50,864,213.30                    —

2032                                  44,819,905.64            52,043,107.48                    —

2033                                 140,796,660.49                             -               —
Total                                553,968,553.34           310,513,803.17                    —

     22. Other non-current asset

                                Closing Balance                                 Opening balance
Category                                             Carrying        Book                         Carrying
                Book value         Provision                                        Provision
                                                      amount         value                           amount
Debt
offset          21,770,721.00      1,527,371.56     20,243,349.44           -               -                 -
housing
Total           21,770,721.00      1,527,371.56     20,243,349.44           -               -                 -

     23. Assets with restricted ownership or use rights

Item                                                      At the year end
                                 Book value       Carrying amount            Type          Restriction
                                                                                            Guarantee
Monetary fund                   110,277,531.37          110,277,531.37       Frozen       deposit/ frozen
                                                                                           bank account
Notes receivable                  4,939,655.20            4,939,655.20   Pledged                Pledged
Financing of receivable          99,078,000.87           99,078,000.87   Pledged                Pledged
FA                               89,720,897.99           60,540,912.88   Pledged                Pledged
Intangible asset                  8,266,573.44            5,421,865.27   Pledged                Pledged
Investment property              38,955,728.90           32,097,825.31   Pledged                Pledged
Total                           351,238,387.77          312,355,790.90          —                —

        (continued)


                                                  128
Item                                              At the beginning of the year
                               Book value         Carrying amount          Type        Restriction
                                                                                        Guarantee
Monetary fund                  84,504,096.01           84,504,096.01       Frozen     deposit/ frozen
                                                                                       bank account
Notes receivable               98,917,384.72           98,917,384.72      Pledged        Pledged
Financing of receivable        15,259,393.79           15,259,393.79      Pledged        Pledged
FA                             89,669,668.86           62,207,555.51      Pledged        Pledged
Intangible asset                8,266,573.44            5,587,198.75      Pledged        Pledged
Investment property            38,955,728.90           32,981,247.79      Pledged        Pledged
Total                        335,572,845.72        299,456,876.57           —              —

     Note: DALIAN BRANKA TECHNOLOGY CO., LTD prosecuted our company, therefore
4,317,629.58Yuan is frozen. But subsequently the adjudication is made. Xuchang Superlift
Energy Saving Technology Co., LTD prosecuted Dalian Bingshan Group Engineering Co., Ltd,
therefore 14,435,825.75 Yuan is frozen. But subsequently both parties reach an accommodation,
the frozen is over. Xining Changfeng Group Trade Co. Ltd prosecuted Dalian Bingshan Group
Engineering Co., Ltd, therefore 2,168,000.00 Yuan is frozen. Dalian Bingshan Guardian
Automation Co., Ltd.’s account is frozen with 439,215.89 Yuan, and Sonyo Refrigeration
(Dalian) Co., Ltd.’s account is frozen with215,000.00 Yuan because of litigation.

     The Company’s subsidiary, Dalian Universe Thermal Technology Co., Ltd pledged the
bank acceptance note to the bank as guarantee for issuing the bank acceptance note.

     The Company’s subsidiary, Dalian Bingshan Engineering & Trading Co., Ltd pledged the
bank acceptance note to the bank as guarantee for issuing the bank acceptance note.

     The Company’s subsidiary, Sonyo Compressor (Dalian)Co., Ltd pledged the bank
acceptance note to the bank as guarantee for issuing the bank acceptance note.

     The Company’s subsidiary, Sonyo Refrigeration (Dalian) Co., Ltd pledged the bank
acceptance note to the bank as guarantee for issuing the bank acceptance note.

     The Company’s subsidiary, Wuhan New World Refrigeration Industry Co., LTD.,
mortgaged its fixed assets, intangible assets and the investment property to the bank, as an
integrated limit of credit used for acceptance, letter of credit, letter of guarantee, factoring, other
specific credit business.




                                                 129
   24. Short-term borrowing

   (1) Category of short-term borrowing

Loan category                             Closing balance         Opening balance
Credit loan                                   256,686,746.70             262,016,713.87
Factoring loan                                     2,976,345.47                       -
Pledged loan                                       2,624,692.21           12,036,276.28
Total                                         262,287,784.38             274,052,990.15

   25. Notes payable

Notes Category                            Closing balance         Opening balance
Bank acceptance notes                          670,720,999.48            616,424,384.85
Commercial acceptance notes                                   -            2,520,000.00
Total                                          670,720,999.48            618,944,384.85

   26. Accounts payable

Item                                      Closing balance         Opening balance
Material payments                             931,983,444.51             956,122,327.00
Project payments                              675,076,736.92             567,873,401.74
Equipment payments                             43,234,911.60              55,406,593.91
Others                                             5,540,269.98            6,695,737.94
Total                                        1,655,835,363.01          1,586,098,060.59

   27. Other accounts payable

Item                                      Closing balance         Opening balance
Interest payable                                              -                       -
Dividend payable                                    533,156.00               533,156.00
Other accounts payable                        278,270,996.17              66,521,094.25
Total                                         278,804,152.17              67,054,250.25

  27.1 Dividend payable

Item                                      Closing balance         Opening balance

Ordinary share dividend                             533,156.00              533,156.00
Total                                               533,156.00              533,156.00




                                             130
  27.2 Other accounts payable

   (1) Other payables categorized by payments nature

Payments nature                           Closing balance              Opening balance
Supplier platform                              179,737,197.47                                -
Apply for reimbursement         and
unpaid                                          24,617,613.80                   21,409,586.91
Payable factoring                               22,407,941.90                                -
Cash pledge and security deposit                14,448,796.02                   11,393,395.62
Agency fees                                         5,317,884.69                             -
Repair                                              4,676,404.47                             -
Trade mark and royalty                              2,531,401.13                 3,505,028.04
Receipts under custody                               830,631.83                    700,531.82
Others                                          23,703,124.86                   29,512,551.86
Total                                          278,270,996.17                   66,521,094.25

   28. Contract liability

   (1) Contract liability

Item                                                     Closing balance     Opening balance
Received in advance due from unrealized revenue            787,685,294.53      647,645,820.57
Total                                                      787,685,294.53      647,645,820.57

   (2) Contract liability over 1 year

Item                                                     Closing balance     Unsettled reason
Company 2                                                    23,690,469.49   Not complete yet
Total                                                        23,690,469.49         —

   (3) Change of book value of the contract liability

Item                                                     Change amount       Change reason
                                                                               Combination
Received in advance due from unrealized revenue            146,750,000.38
                                                                              Scope change
Total                                                      146,750,000.38          —




                                              131
        29. Employee’s payable

        (1) Category of employee’s payable

                                  Opening
Item                                                Increase              Decrease         Closing balance
                                  balance
Short-term employee’s
                              118,200,459.60      698,112,149.00          666,960,098.49     149,352,510.11
payable
Post-employment benefit
–defined contribution              16,223.63      67,338,512.94           67,343,533.22          11,203.35
plan
Termination benefits                          -     2,643,680.07            2,510,280.07         133,400.00
Other welfare due within
1 year                                        -                   -                    -                     -

Total                         118,216,683.23      768,094,342.01          736,813,911.78     149,497,113.46

        (2) Short-term employee’s payables

                                  Opening
Item                                                 Increase              Decrease        Closing balance
                                  balance
Salaries, bonus,
                              103,351,245.84       566,724,928.58         533,844,717.12    136,231,457.30
allowance, and subsidy
Welfare                                       -     29,570,037.23          29,570,037.23                  -
Social insurance                     9,001.71       40,370,113.39          40,372,189.41           6,925.69
Include: Medical
                                     7,733.56       32,334,416.06          32,335,495.51           6,654.11
insurance
        Supplemental
                                              -            37,988.21           37,988.21                  -
insurance
        On-duty injury
                                     1,268.15        4,158,076.12           4,159,072.69            271.58
insurance
        Maternity insurance                   -      3,839,633.00           3,839,633.00                  -
Housing funds                                 -     46,650,075.94          46,471,919.96        178,155.98
Labor union and training
                                  3,426,187.27      11,176,647.07          10,594,153.94       4,008,680.40
expenses
Short-term leave with pay                     -                       -                -                  -
Reward bonus and welfare
                               11,414,024.78         3,620,346.79           6,107,080.83       8,927,290.74
fund
Total                         118,200,459.60       698,112,149.00         666,960,098.49     149,352,510.11

        (3) Defined contribution plan




                                                     132
                                 Opening
Item                                              Increase                Decrease        Closing balance
                                  balance
Pension                            12,626.24      65,219,039.12           65,220,801.52         10,863.84
Unemployment
                                    3,597.39       2,119,473.82            2,122,731.70             339.51
insurance
Company annuity plan                        -                    -                    -                  -
Total                              16,223.63      67,338,512.94           67,343,533.22         11,203.35

        30. Tax payable

Item                                             Closing balance                  Opening balance
Enterprise income tax                                     10,958,503.00                      3,541,171.62
Value-added tax                                            5,013,411.92                     23,058,922.64
Real estate tax                                            2,589,711.66                      2,212,510.37
Land use tax                                               1,313,078.49                      1,122,457.62
Stamp duty                                                   879,269.28                        787,688.77
City maintenance and construction tax                        551,839.60                      1,253,818.83
Individual income tax                                        514,426.82                        818,322.16
Education surcharge                                          394,171.13                        895,584.93
River toll fee                                                 2,080.36                          1,046.68
Total                                                     22,216,492.26                     33,691,523.62

        31. Non-current liabilities due within one year

Item                                             Closing balance                  Opening balance
Bond payable due within one year                      119,400,000.00                        24,900,000.00
Long-term payable due within one year                     24,636,926.13                     29,809,686.93
Lease obligation due within one year                       6,608,421.51                      8,396,267.63
Total                                                 150,645,347.64                        63,105,954.56

        32. Other current liabilities

Item                                            Closing balance                   Opening balance
Notes payable endorsed not
                                                      148,957,983.15                       127,165,397.88
derecognized
Output Vat to be carried forward                          54,357,881.28                     77,484,605.36
Total                                                 203,315,864.43                       204,650,003.24

        33. Long-term borrowing

        (1) Category of long-term borrowing

Category                                        Closing Balance                   Opening Balance

                                                   133
Pledged loan                                        609,700,000.00                     585,100,000.00
Guarantee loan                                         70,000,000.00                   130,000,000.00
Total                                               679,700,000.00                     715,100,000.00

        Note 1: Pledged loan of 0.6 billion Yuan is for business combination in 2022, which
   comprises

        0.3 billion Yuan from Dalian Zhoushuizi Branch of China Construction Bank Corporation,
   5years with 2.75% borrowing rate. 50% shareholdings of Sonyo Compressor (Dalian)Co., Ltd
   and 37.5% shareholdings of Sonyo Refrigeration System (Dalian) Co., Ltd. were pledged. China
   Construction Bank Corporation will complete the guarantee in February 2023. 0.3 billion Yuan
   from Dalian Branch of Bank of Communications Co., Ltd., 7 years with 2.75% borrowing rate.
   50% shareholdings of Sonyo Compressor (Dalian)Co., Ltd and 37.5% shareholdings of Sonyo
   Refrigeration System (Dalian) Co., Ltd. were pledged. Dalian Branch of Bank of
   Communications Co., Ltd will complete the guarantee in February 2023. In 2024, 40 million
   Yuan loan is planned to pay back to Construction bank and 1.44 million Yuan loan to
   Communications bank.

        Note 2: Pledged loan includes a new loan of 87 million Yuan in 2023 for acquisition of
   Sonyo Refrigeration System (Dalian) Co., Ltd. held by Panasonic Corporation of China Co.,
   LTD and Sanyo Electric (China)Co., Ltd. The loan is expired by 7 years with 2.75% borrowing
   rate. Up to December 31, 2023, the closing balance is 79million Yuan and will be repaid 5
   million Yuan in 2024.

        Note 3: In year 2016, the Development Fund from China Development Bank gave support
   to the Company’s intelligent and green equipment of cold chain and service industry base
   project and provided special fund to the Company’s holding shareholder, Bingshan Group. The
   fund is160 million Yuan with 10year’s expiration at 1.2% rate. Once the fund arrived, Bingshan
   Group gave it to the Company at the same rate of 1.2% in lump sum. The above fund needed to
   be warranted by the Company. The guarantee seems to be given for the holding shareholder, but
   it is for the Company itself in fact. Up to December 31, 2023, the closing balance is 130 million
   Yuan and will be repaid 60 million Yuan in 2024.




                                                 134
            34. Lease obligation

          (1) Details of lease obligation

       Category                                              Closing balance              Opening balance
       Lease payment                                                  38,276,477.18             23,357,885.20
       Less: unrecognized finance expense                              7,533,068.70              3,731,085.52
       Non-current liability due within 1 year                         6,608,421.51              8,396,267.63
       Net lease liability                                            24,134,986.97             11,230,532.05

          35. Long term accounts payable

                             Item                            Closing Balance              Opening Balance
       Long term accounts payable                                     10,331,937.30             31,009,644.16
       Special fund payable                                                       -                          -
       Total                                                          10,331,937.30             31,009,644.16

           35.1Category by nature

       Nature                                                Closing Balance              Opening Balance
       Financial lease borrowings                                     10,331,937.30             31,009,644.16
       Total                                                          10,331,937.30             31,009,644.16

          36. Provision

       Nature                       Closing Balance         Opening Balance                    Reason
       Warranty                         4,544,802.88                   3,094,982.15    Service after sales
       Open litigation                               -                15,710,985.28              —
       Total                            4,544,802.88                  18,805,967.43              —

          37. Deferred income

           (1) Category of deferred income

Item                           Opening Balance             Increase            Decrease          Closing Balance
Government subsidy                   99,754,346.39       10,522,129.73         12,002,208.32          98,274,267.80
Total                                99,754,346.39       10,522,129.73         12,002,208.32          98,274,267.80




                                                           135
             (2) Government subsidy


                                                                    Into non-                          The value offset                                  Related
                                      Opening                                         Into other                                        Closing
Government subsidy item                              Increase       operating                          cost and expense       Others                   with asset/
                                      Balance                                          income                                           Balance
                                                                     income                                this year                                   income


Contribution to subsidiary                                                                                                                                Asset
                                  37,876,000.00                 -               -     1,114,000.00                        -        -   36,762,000.00
company relocation                                                                                                                                       related
Application of NH3 and CO2
instead of R22 screw                                                                                                                                     Asset
                                  20,506,438.28                 -               -     1,932,952.12                        -        -   18,573,486.16
refrigerating machine combined                                                                                                                          Related
condensing unit
                                                                                                                                                          Asset
Eco Compressor project            17,421,621.34                 -               -     2,553,850.15                        -        -   14,867,771.19    / Income
                                                                                                                                                         related
R290 replacement of R22 large                                                                                                                             Asset
                                  13,006,663.20      3,251,665.80               -                  -                      -        -   16,258,329.00
industrial screw unit                                                                                                                                    related
R290 replacement of R22
                                                                                                                                                          Asset
industrial double stage screw         4,747,680.00   1,186,920.00               -                  -                      -        -    5,934,600.00
                                                                                                                                                         related
unit
                                                                                                                                                          Asset
Compressor IC system                  3,169,590.55              -               -         368,769.72                      -        -    2,800,820.83
                                                                                                                                                         related

Ultrasonic intelligent defrost                                                                                                                            Asset
                                      3,006,353.02              -               -         414,824.40                      -        -    2,591,528.62
technology                                                                                                                                               related

                                                                                                                                                          Asset
Refrigeration testing APP               20,000.00               -               -          20,000.00                      -        -               -
                                                                                                                                                         related



                                                                                    136
                                                              Into non-                          The value offset                                Related
                                 Opening                                        Into other                                       Closing
Government subsidy item                        Increase       operating                          cost and expense       Others                 with asset/
                                 Balance                                         income                                          Balance
                                                               income                                this year                                 income

2023 AI Innovation
Development Plan Fund-
                                                                                                                                                Income
Government subsidy of                      -   3,000,000.00               -     3,000,000.00                        -        -             -
                                                                                                                                                related
Liaoning Provincial Department
of Science and Technology -
                                                                                                                                                Income
Brand establishment expenses               -    947,718.00                -         947,718.00                      -        -             -
                                                                                                                                                related

Meat storage technology and                                                                                                                     Income
                                           -    487,400.00                -           1,668.00                      -        -    485,732.00
equipment                                                                                                                                       related

                                                                                                                                                Income
Digital platform construction              -    440,000.00                -         440,000.00                      -        -             -
                                                                                                                                                related
FY2020 Subsidy for key science
and technology research and                                                                                                                     Income
                                           -    418,500.00                -         418,500.00                      -        -             -
development by Dalian Science                                                                                                                   related
and Technology Bureau
Study on heat transfer
performance of red water heat                                                                                                                   Income
                                           -    220,000.00                -         220,000.00                      -        -             -
exchanger and replacement of                                                                                                                    related
heat exchange tube



                                                                              137
                                                           Into non-                          The value offset                                Related
                               Opening                                       Into other                                       Closing
Government subsidy item                      Increase      operating                          cost and expense       Others                 with asset/
                               Balance                                        income                                          Balance
                                                            income                                this year                                 income


                                                                                                                                             Income
Special funds for innovation             -    180,000.00               -         180,000.00                      -        -             -
                                                                                                                                             related

FY2023 subsidy by Bureau of                                                                                                                  Income
                                         -    115,500.00               -         115,500.00                      -        -             -
Science and Technology                                                                                                                       related

                                                                                                                                             Income
Loan discount                            -     65,833.33               -          65,833.33                      -        -             -
                                                                                                                                             related

FY2022 Science and                                                                                                                           Income
                                         -     50,000.00               -          50,000.00                      -        -             -
Technology Awards                                                                                                                            related


                                                                                                                                             Income
Demonstration subsidy                    -     50,000.00               -          50,000.00                      -        -             -
                                                                                                                                             related

Dalian Employment and Talent
Service Center government                                                                                                                    Income
                                         -     28,816.00               -          28,816.00                      -        -             -
subsidy - unemployment                                                                                                                       related
insurance expansion subsidy




                                                                           138
                                                                           Into non-                         The value offset                                      Related
                                       Opening                                               Into other                                         Closing
Government subsidy item                                   Increase         operating                         cost and expense       Others                       with asset/
                                       Balance                                                income                                            Balance
                                                                            income                               this year                                       income


FY2022 Dalian scientific and
technological achievements                                                                                                                                        Income
                                                  -          38,000.00                 -         38,000.00                      -        -                   -
transfer and transformation                                                                                                                                       related
subsidy and award project

Subsidies for the training of                                                                                                                                     Income
                                                  -          18,360.00                 -         18,360.00                      -        -                   -
highly skilled personnel                                                                                                                                          related

Subsidies for college graduates                                                                                                                                   Income
                                                  -          15,056.60                 -         15,056.60                      -        -                   -
and social security subsidies                                                                                                                                     related
Subsidy for employment of
graduates by Dalian Jinpu New                                                                                                                                     Income
                                                  -           6,000.00                 -          6,000.00                      -        -                   -
Area employment and talent                                                                                                                                        related
service center
                                                                                                                                                                  Income
Subsidy for labor training                        -           2,360.00                 -          2,360.00                      -        -                   -
                                                                                                                                                                  related
Total                               99,754,346.39        10,522,129.73                 -    12,002,208.32                       -        -     98,274,267.80         —

        Note: Asset related grant shall be offset the cost or expense within the asset’s useful life; income related grant shall be booked into other income or offset cost
        or expense if it is relevant to daily activity, otherwise it shall be booked into non-operating income.




                                                                                           139
   38.Share capital

                                                  Increase/decrease(+/-)
                  Opening          New                        Transfer
Item                                            Share                                            Closing balance
                  balance         share                     from capital     others   Subtotal
                                               dividend
                                  issued                       reserve
Total
share          843,212,507.00              -            -                -        -          -      843,212,507.00
capital

          39.Capital reserves

                                 Opening
Items                                                       Increase            Decrease         Closing Balance
                                  Balance
Share premium                   669,193,413.27                           -                  -      669,193,413.27
Other capital reserves           47,903,685.11                           -                  -       47,903,685.11
Total                           717,097,098.38                           -                  -      717,097,098.38




                                                             140
          BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD
          Notes to financial statements
          January 1, 2023 to December 31, 2023
          (The currency is in RMB Yuan except otherwise indicated)
          (English translation for reference only)
          40.Other comprehensive income

                                                                                            Current year
                                      Opening
             Items                                  Amount for the   Less:Previously recognized     Less:          After-tax       After-tax attribute   Closing Balance
                                      Balance
                                                     period before    in profit or loss into other   income       attribute to the      to minority
                                                      income tax        comprehensive income           tax        parent company        shareholder
I.Later can’t reclassified into
profit and loss of other                        -                -                               -            -                  -                     -                     -
comprehensive income
II. Later reclassified into profit
and loss of other                    2,208,669.73                -                               -            -                  -                     -          2,208,669.73
comprehensive income
Other comprehensive income
that can be transferred to profit    2,208,669.73                -                               -            -                  -                     -          2,208,669.73
or loss under the equity method
Other comprehensive income
total                                2,208,669.73                -                               -            -                  -                     -          2,208,669.73




                                                                                          141
   41. Special reserve

Item                     Opening Balance       Increase          Decrease       Closing Balance
Manufacturing safety                     - 13,214,150.71 12,764,775.75               449,374.96
Total                                    - 13,214,150.71 12,764,775.75               449,374.96

   42.Surplus reserves

Item                               Opening                                          Closing
                                                      Increase       Decrease
                                    Balance                                         Balance
Statutory surplus reserve       362,972,224.98      10,426,530.94              - 373,398,755.92
Discretionary surplus reserve   462,249,814.41      31,510,869.01              - 493,760,683.42
Total                           825,222,039.39      41,937,399.95              - 867,159,439.34

   Note: The Company made profit distribution during the reporting period. According to the
resolution of the 2022 annual General meeting of shareholders, the discretionary surplus reserve
of RMB 31,510,869.01 will be appropriated based on 20% of the net profit of the statutory
financial report for FY2022; Statutory surplus reserve of 10,426,530.94 Yuan shall be
appropriated based on 10% of the net profit of the parent company this year.




                                              142
   43.Undistributed profits

Item                                                   Current year       Last year
Closing balance of last year                            618,445,922.58    627,764,582.32
Add: Adjustments to the opening balance of
                                                            -65,810.05       -539,927.37
       undistributed profits
    Including: additional retrospective adjustments
                                                                      -                -
    according to the new accounting standards
     Change on accounting policy                            -65,810.05       -539,927.37
     Correction of prior period significant errors                    -                -
       Change on combination scope under same
                                                                      -                -
       control
     Other factors                                                    -                -
Opening balance of current year                         618,380,112.53    627,224,654.95
Add: net profit attributable to shareholders of
                                                         49,375,900.83     18,255,330.45
parent company in the year
Less: Provision for statutory surplus reserves           10,426,530.94     15,755,434.51
       Provision for any surplus reserves                31,510,869.01                 -
       Provision of general risk                                      -                -
       Dividends payable for common shares                8,432,125.07      8,432,125.07
       Common stock dividends converted to equity                     -                -
       Others                                                         -     3,386,430.61
Closing balance of current year                         617,386,488.34    618,380,112.53




                                                 143
 44.Operating revenue and cost
    (1) Details
           Items                                                   Current year                                          Last year
                                                        Sales revenue            Cost of sales       Sales revenue               Cost of sales
           Revenue from principle operation             4,708,789,817.06         3,931,870,621.80    2,803,347,359.37                2,459,913,203.46
           Revenue from other operation                   107,151,650.64            73,726,836.39       89,737,950.92                  77,615,637.94
           Total                                        4,815,941,467.70         4,005,597,458.19    2,893,085,310.29                2,537,528,841.40
    (2) Main revenue and COS details
                                                     Northeast China                         Central China                                  Total
Contract classification
                                              Sales revenue     Cost of sales      Sales revenue     Cost of sales          Sales revenue           Cost of sales
Classified by products                    4,613,126,067.20 3,833,847,926.43 202,815,400.50           171,749,531.76       4,815,941,467.70      4,005,597,458.19
         Manufacture products             3,212,707,591.48 2,562,240,496.51 144,731,244.58           128,025,645.17       3,357,438,836.06      2,690,266,141.68
         Project installation             1,270,182,363.19 1,173,033,479.16         24,480,978.58     22,576,643.32       1,294,663,341.77      1,195,610,122.48
         Other products and service           130,236,112.53     98,573,950.76      33,603,177.34     21,147,243.27         163,839,289.87          119,721,194.03
Classified by geography location          4,613,126,067.20 3,833,847,926.43 202,815,400.50           171,749,531.76       4,815,941,467.70      4,005,597,458.19
         domestic                         4,075,399,244.72 3,437,323,354.01 202,815,400.50           171,749,531.76       4,278,214,645.22      3,609,072,885.77
         overseas                             537,726,822.48   396,524,572.42                    -                   -      537,726,822.48          396,524,572.42
Timing of goods transferred               4,613,126,067.20 3,833,847,926.43 202,815,400.50           171,749,531.76       4,815,941,467.70      4,005,597,458.19
        At a point                        4,514,583,069.37 3,736,525,341.06 202,815,400.50           171,749,531.76       4,717,398,469.87      3,908,274,872.82
        Over the time                          98,542,997.83     97,322,585.37                   -                   -       98,542,997.83           97,322,585.37
Total                                     4,613,126,067.20 3,833,847,926.43 202,815,400.50           171,749,531.76       4,815,941,467.70      4,005,597,458.19




                                                                            144
   45.Taxes and surcharges

Items                                  Current year       Last year
Property tax                              10,073,731.86     8,149,841.00
City construction tax                      9,012,910.60     3,787,453.40
Education surcharge                        6,439,924.63     2,716,374.19
Land use tax                               5,015,774.62     4,339,092.94
Stamp duty                                 3,354,441.63     3,036,523.34
Vehicle and vessel tax                        48,250.80        21,640.80
Others                                        23,642.94        10,700.69
Total                                     33,968,677.08    22,061,626.36

   46.Selling expenses

Items                                  Current year       Last year
Employee benefit                         141,519,344.86    94,640,905.30
Travel expense                            25,719,851.30    12,871,992.12
Official business expense                 25,483,586.78    15,487,688.84
Maintenance and repair expense            17,803,113.38    17,886,776.97
Business entertaining expense             15,227,636.78     9,081,381.79
Advertisement and bids expense             4,936,902.38     1,817,387.69
Depreciation expense                       2,257,182.91       861,025.06
Other expense                                914,408.09     1,088,557.19
Total                                    233,862,026.48   153,735,714.96




                                 145
   47. Administrative expenses

Items                                              Current year      Last year
Employee benefit                                   127,272,720.89      104,233,517.24
Official expense                                     28,493,919.83      19,600,747.44
Depreciation expense                                 25,264,201.98      17,450,109.34
Maintenance and repair expense                       16,475,833.99       8,558,115.62
Long-term assets amortization                        11,646,085.10       7,988,593.35
Patent trade mark use                                 9,372,566.10       1,139,572.89
Design consultant and test service expense            8,075,373.29      14,255,471.99
Travel expense                                        6,514,713.45       4,544,965.76
Other taxes and fee                                   3,686,510.53         841,243.95
Safety production cost                                3,062,462.68       2,791,153.21
Business entertaining expense                         2,738,569.12       1,664,993.09
Insurance expense                                     1,435,356.69         830,189.74
Advertisement expense                                  814,999.22          424,668.21
Transportation expense                                  47,368.09          204,637.83
Other expense                                         5,667,564.54       1,850,224.84
Total                                              250,568,245.50      186,378,204.50

   48.Technology development expense

Items                                              Current year      Last year
Employee benefit                                    102,598,481.06      52,660,638.70
Raw material                                         20,934,040.54      12,253,575.39
Depreciation and amortization expense                14,685,194.95       6,409,516.10
Other expense                                        25,968,001.16       5,469,075.50
Total                                               164,185,717.71      76,792,805.69

   49.Financial expenses

Items                                              Current year      Last year
Interest expenses                                    37,918,133.57      18,581,726.78
Less: interest income                                10,558,433.14       5,850,062.80
Add: exchange loss                                     -299,066.17       -3,698,043.31
Add: others expenditure                               3,097,443.21       2,791,902.36
Total                                                30,158,077.47      11,825,523.03




                                             146
   50.Other income

Items                                             Current year       Last year
Input VAT accelerated deduction                     17,504,090.47                    -
Government subsidy                                  12,002,208.32        6,473,525.00
Insurance premium refund                              367,800.00                     -
Personal income tax handling fee refund               180,238.52            90,694.36
Job stability subsidy                                  111,468.81           98,244.00
VAT deduction for recruiting poor people                12,350.00                    -
Gain on debt restructuring                               1,512.39          119,554.03
Land and property tax preference                                 -         391,094.76
VAT return                                                       -               43.32
Total                                               30,179,668.51        7,173,155.47

   51.Gain on fair value change

Source of gain on FV change                       Current year       Last year
Other noncurrent financial assets                   14,073,910.32      -46,991,034.40
Total                                               14,073,910.32      -46,991,034.40

   52.Investment income

Items                                             Current year       Last year
Long-term equity investment gain under
                                                    -4,884,731.99      -37,218,861.27
equity method
Gain from disposal of long-term equity
                                                                 -     109,098,404.60
investment
Gain from FV remeasurement of the shares
                                                                 -     170,729,805.79
on obtaining control
Gain from holding of other noncurrent
                                                     5,796,799.24       20,671,710.39
financial assets
Gain from disposal of other no-current
                                                                 -      43,296,525.04
financial assets
Gain on debt restructuring                           1,790,089.90          110,913.39
Discounting fees for bank acceptance note           -1,595,528.43                    -
Dividend received for other equity
                                                                 -                   -
instrument held
Total                                                1,106,628.72      306,688,497.94




                                            147
    53.Credit impairment loss (loss listed as “-”)

Items                                                    Current year       Last year
Bad debt loss on notes receivable                              91,074.58          -789,111.45
Bad debt loss on receivable                               -68,147,779.35       -77,384,660.21
Bad debt loss on other receivable                          -1,885,950.98        -4,020,227.27
Bad debt loss on long term receivable                        210,600.00          -501,389.82
Total                                                     -69,732,055.75       -82,695,388.75

    54.Assets impairment losses (loss listed as “-”)

Items                                                    Current year       Last year
Loss on impairment of inventory and cost to
                                                          -17,646,037.59      -39,711,456.37
fulfill the contract obligation
Loss of contract asset impairment                           4,767,716.49     -30,814,338.63
Impairment on other non-current asset                      -1,527,371.56                   -
Impairment on construction in progress                                  -      -4,300,000.00
Total                                                     -14,405,692.66     -74,825,795.00

    55.Gain on assets disposal (loss listed as “-”)

                      Item                               Current year       Last year
 Gain on non-current assets disposal                       -1,184,930.14         194,556.13
 Including: gain on non-current assets
                                                           -1,184,930.14         194,556.13
 disposal not classified as held for sale
 Including: gain on fixed assets disposal                    -689,706.84         194,556.13
           gain on intangible assets disposal                -433,100.00                   -
            gain on early derecognition of use
                                                              -62,123.30                   -
 right asset
 Total                                                     -1,184,930.14         194,556.13




                                                  148
       56. Non-operating income

(1)        Non-operating income list

                                                                         Amounts recognized into
               Item                Current year          Last year       non-recurring profit or
                                                                             loss for the year
Loss claimed reverse                 10,206,786.86                   -              10,206,786.86
Penalty received                         2,021,941.14     6,612,182.54               2,021,941.14
Creditor giving up                       1,895,792.78     4,345,157.74               1,895,792.78
Gain on disposal of
                                                            93,160.73
non-current asset                          39,884.14                                    39,884.14
Contract withdrawn and
received in advance
                                                    -      432,311.90                              -
transferred to non-operating
income
Other items                               369,517.17       358,715.64                  369,517.17
Total                                14,533,922.09       11,841,528.55              14,533,922.09

       57.Non-operating expenses

                                                                         Amounts recognized into
               Item                Current year          Last year       non-recurring profit or
                                                                             loss for the year
Non-current assets scrap
                                         5,511,195.40      191,291.12                5,511,195.40
loss
Compensation                              952,429.15      2,813,844.43                 952,429.15
Outward donation                          360,000.00        57,000.00                  360,000.00
Expected loss for open
                                                    -     2,019,000.00                             -
litigation
Others                                    142,852.98       123,404.80                  142,852.98
Total                                    6,966,477.53     5,204,540.35               6,966,477.53




                                                   149
   58. Income tax expenses

    (1) Income tax expenses

Items                                           Current year                Last year
Current income tax expenses                           25,126,696.59                     5,482.46
Deferred income tax expenses                          -14,094,997.51               571,333.82
Total                                                 11,031,699.08                576,816.28
    (2)   Adjustment process of accounting profit and income tax expense

Items                                                                      Current year
Consolidated total profit this year                                             65,206,238.83
Income tax expenses at applicable tax rate                                       9,780,935.82
Effect on subsidiary applied to different tax rate                              -1,415,501.20
Effect on prior period income tax adjustment                                       503,530.40
Effect on non-taxable income                                                      -657,243.07
Effect on non-deductible cost, expense and loss                                  1,850,564.14
Effect on use of deductible loss from unrecognized deferred tax
assets in the prior period                                                        -546,630.00
Deferred tax assets recognized for prior period temporary
difference                                                                      -1,127,554.15
Effect on temporary difference or deductible loss from
unrecognized deferred tax assets this year                                      20,404,968.93

R&D expenditure accelerated deduction                                          -20,664,943.68
Others                                                                           2,903,571.89
Income tax expense                                                              11,031,699.08

     59. Other comprehensive income

     Refer to the note “VI.40 Other comprehensive income” for details.




                                                150
     60. Notes to cash flow statement

    (1) Cash relevant to operating activities

    1) Cash received relevant to operating activities

Items                                                     Current year          Last year
Deposit returned                                                56,211,426.27    43,441,397.62
Lease premium received                                          34,669,117.40    14,641,754.19
Government grants                                               15,077,248.10     5,669,861.48
Interest income                                                  8,914,720.67     5,128,719.77
                      rd
Receivable from the 3 party                                      3,001,285.07     4,656,358.49
Compensation                                                     2,497,389.05    10,248,694.24
Received travel expense refund                                   1,834,601.94     3,180,530.19
Frozen money refund                                               550,487.90      3,407,480.07
Others                                                           4,072,381.79     2,065,719.26
Total                                                      126,828,658.19        92,440,515.31

    2) Cash paid relevant to operating activities

Items                                                     Current year          Last year
Expenditure                                                 202,530,612.54      122,463,075.59
Deposit paid                                                    50,899,935.96    89,837,201.58
Frozen accounts                                                 21,363,555.30       209,197.14
Business travel borrowing                                        8,978,717.58     6,698,577.75
Bank handling charges                                            3,533,466.20     1,737,635.11
Unsettled AR/AP among non-related party                            181,386.21     2,896,588.50
Others                                                           2,935,250.16     8,261,197.76
Total                                                       290,422,923.95      232,103,473.43

    (2) Cash relevant to investing activities

    1) Significant cash received relevant to investing activities

Items                                                     Current year          Last year
Cash dividend                                                   44,342,521.09   109,215,313.16

    2) Significant cash paid relevant to investing activities

 Items                                                    Current year          Last year
 Purchase of long-term asset                                    89,321,945.50    50,713,747.56

    3) Other cash paid relevant to investing activities

 Items                                                    Current year          Last year
                                                 151
Fixed-term deposit                                         168,000,000.00                 -

   (3) Cash relevant to financing activities

   1) Other cash received relevant to financing activities

Items                                                     Current year       Last year
Notes payable to supplier                                    55,956,005.87                -
Sale leaseback and financial lease                            6,600,000.00    12,000,000.00
Notes discounted                                              3,119,926.93    11,991,047.27
Total                                                        65,675,932.80    23,991,047.27

   2) Others cash paid relevant to financing activities

Items                                                     Current year       Last year
Payment of guarantee money                                   39,502,750.62                -
Notes payable to supplier                                    13,629,318.00                -
Sale& leaseback and financial lease                          10,891,978.68    25,415,743.25
Lease premium payable                                         6,585,497.64     3,713,373.61
Discount interest on credit letter                              80,863.54                 -
Total                                                        70,690,408.48    29,129,116.86




                                               152
   3) Changes on liability relevant to financing activities

                                                              Increased                          Decreased
                                Opening
         Items                                                                                                            Closing Balance
                                Balance                               Non- cash                           Non- cash
                                                 Cash change                            Cash change
                                                                       change                              change

Short-term borrowings        274,052,990.15 298,643,636.90           10,207,457.33 314,000,000.00         6,616,300.00     262,287,784.38
Long-term borrowings         715,100,000.00      87,000,000.00                    -     27,900,000.00    94,500,000.00     679,700,000.00
Lease liability                11,230,532.05                    -    29,093,821.83      15,982,846.23        206,520.68     24,134,986.97
Non-current liability due                                       -
within one year                63,105,954.56                        104,016,474.87      14,960,912.15     1,516,169.64     150,645,347.64
Long-term payable              31,009,644.16       6,600,000.00      10,845,763.56      22,948,324.57    15,175,145.85      10,331,937.30
Other payable-supplier
platform                                     -   55,956,005.87      137,410,509.60      13,629,318.00                 -    179,737,197.47
Total                       1,094,499,120.92 448,199,642.77         291,574,027.19 409,421,400.95       118,014,136.17    1,306,837,253.76




                                                                                  153
     61. Supplementary information of consolidated cash flow statement

    (1) Information

Items                                                          Current year          Last year
1. Adjusting net profit into cash flows of operating
                                                                   ——                ——
activities:
Net profit                                                       54,174,539.75       20,366,757.66
Add: Provision for impairment of assets                          14,405,692.66       74,825,795.00
      Provision for impairment of credit                         69,732,055.75       82,695,388.75
      Depreciation of fixed assets, Amortization of
                                                                135,625,135.60       82,258,092.89
mineral resources, and biological assets
      Depreciation of right-of-use assets                        11,340,839.21        3,709,086.79
      Amortization of intangible assets                          13,570,693.11       10,478,529.57
      Amortization of long-term deferred expenses                 1,545,642.28        1,455,157.51
      Losses on disposal of fixed assets, intangible assets,
                                                                  1,184,930.14         -194,556.13
and long-term assets (income listed with”-”)
      Losses on write-off of fixed assets (income listed
                                                                  5,471,311.26           98,130.39
      with”-”)
      Change of fair value profit or loss                       -14,073,910.32       46,991,034.40
      Financial expense (income listed with”-”)                37,918,133.57       18,581,726.78
      Investment loss (income listed with”-”)                  -1,106,628.72     -306,688,497.94
      Decrease of deferred tax assets (increase listed
                                                                -21,471,717.58        9,978,391.90
with”-”)
      Increase of deferred tax liabilities (decrease listed
                                                                   864,530.06         -9,407,058.08
with”-”)
      Decrease of inventories (increase listed with”-”)      -257,408,322.60     -412,972,663.16
      Decrease of operating receivables (increase listed
                                                               -500,972,621.69    -1,052,478,135.51
with”-”)
     Increase of operating payables (decrease listed
                                                                424,759,029.78    1,374,055,519.82
with”-”)
     Others                                                                   -                   -
Net cash flows arising from operating activities                -24,440,667.74      -56,247,299.36
2. Significant investment and financing activities
                                                                   —                   —
unrelated to cash income and expenses
    Liabilities transferred to capital                                        -                   -
    Convertible bonds within 1 year                                           -                   -
    Financing leased fixed assets                                             -                   -
3. Net increase (decrease) of cash and cash                        —                   —

                                                    154
Items                                                        Current year             Last year
equivalent
Closing balance of cash                                       670,440,335.98          921,661,803.17
Less: Opening balance of cash                                 921,661,803.17          438,969,337.87
Add: Closing balance of cash equivalent                                         -                     -
Less: Opening balance of cash equivalent                                        -                     -
Net increase of cash and cash equivalent                     -251,221,467.19          482,692,465.30

    (2) Net cash paid to acquisition of subsidiary

Items                                                                           Current year
Cash & cash equivalent paid for acquisition                                          145,285,500.00
Sonyo Refrigeration (Dalian) Co., Ltd.                                               145,285,500.00
Less: Cash & cash equivalent held by acquirees on acquisition date                   133,228,548.98
Sonyo Refrigeration (Dalian) Co., Ltd.                                               133,228,548.98
Add: Cash & cash equivalent paid for prior period’s acquisition                                  -
Net cash paid to acquisition of subsidiary                                            12,056,951.02

    (3) Cash and cash equivalents

Items                                                       Current year             Last year
Cash                                                        670,440,335.98           921,661,803.17
Including: Cash on hand                                            70,750.93              80,702.47
Bank deposit used for paying at any moment                  670,303,450.55           921,581,100.70
Other monetary fund for paying at any moment                       66,134.50                      -
Deposit fund in central bank available for payment                          -                     -
Cash equivalent                                                             -                     -
Including: bonds investment with maturity in 3 months                       -                     -
Closing balance of cash and cash equivalents                670,440,335.98           921,661,803.17
Cash and cash equivalents with restriction within the
                                                                            -                     -
Company and its subsidiaries of the group




                                               155
    (4) Monetary fund not belonging to cash and cash equivalent

               Items                  Current year           Last year            Reasons
Fixed term deposit                   168,000,000.00                      -     Held to maturity
Guarantee money for bank
                                          44,200,486.65     48,567,322.04     Guarantee money
acceptance note
Guarantee money for guarantee
                                          41,547,977.10     33,697,941.99     Guarantee money
letter
Frozen                                    21,578,536.32       550,487.90           Frozen
Interest receivable                        2,321,702.76       959,002.78       Held to maturity
Rural workers’ salary account
                                           1,731,234.30                  -     Special account
restriction
Rural workers guarantee fund               1,219,297.00       729,341.30      Guarantee money
Total                                  280,599,234.13       84,504,096.01              —

       62. Change of shareholder’s equity

           None

       63. Monetary category of foreign currency

    (1)       Monetary category of foreign currency

                              Closing Balance             Exchange
          Item                                                           Closing Balance (RMB)
                             (foreign currency)             Rate
Cash                                 —                      —                   —
Including:USD                         833,133.93            7.0827                    5,900,837.69
             JPY                   106,591,562.00            0.0502                    5,352,282.10
             Euro                         44,150.36          7.8592                     346,986.51
             HK$                          93,239.38          0.9062                      84,495.39
Accounts receivable                  —                      —                   —
Including: USD                        7,081,806.85           7.0827                50,158,313.38
            JPY                     76,615,583.00            0.0502                    3,847,098.27
            Euro                       690,473.72            7.8592                    5,426,571.06
Accounts payable                     —                      —                   —
Including: USD                        1,124,814.88           7.0827                    7,966,726.35
            JPY                     35,741,667.00            0.0502                    1,794,696.33
Other accounts payable               —                      —                   —
Including: JPY                        8,304,510.00           0.0502                     416,994.36




                                                156
     64. Lease

     (1) As a lessee

                             Items                             Current year        Last year
Interest expense on lease liabilities                            1,043,053.19       1,259,087.12
Short-term lease expense recognized in income statement          4,114,059.87       1,650,882.62
Low-value asset lease expense recognized in income
statement (excl short-term lease)                                              -               -
Income from the sublease of the right-of-use the assets                        -               -
Sum of cash outflows related to leases                           8,453,910.59       5,364,256.23
Cash inflow from sale and leaseback transactions                 6,600,000.00      12,000,000.00
Cash outflow from sale and leaseback transactions               10,891,978.68      25,415,743.25

     (2) As a lessor

           Operating lease

                                                   Include: income related to variable lease
        Items            Lease income              payments not included in lease payment
                                                                  receivable
Office and plant              28,888,128.11                                                    -
Apartment                        106,380.96                                                    -
Total                         28,994,509.07                                                    -

     65. Research and development expense

                             Items                             Current year        Last year
Labor cost                                                     102,598,481.06      52,660,638.70
Material cost                                                   20,934,040.54      12,253,575.39
Depreciation and amortization                                   14,685,194.95       6,409,516.10
Others                                                          25,968,001.16       5,469,075.50
Total                                                          164,185,717.71      76,792,805.69
           Expensed R&D                                        164,185,717.71      76,792,805.69
           Capitalized R&D                                                     -               -




                                              157
VII. Change of Consolidation Scope

     1.   Business combination not under same control

     (1) Business combination not under same control this year
                  Share                                                                                       Information between acquisition date and the year
                                                                    Acquisition       Basis for determining                         end
  Acquire       acquisition       Cost         (%)      Method
                                                                       date             acquisition date
                  point                                                                                         Revenue          Net profit        cashflow
Sonyo
Refrigeration                                           Purchase
                2023-6-2      145,285,500.00 100.00                  2023-6-2          Transfer of control    253,806,212.28    3,987,334.85      -82,362,599.35
(Dalian) Co.,                                           with cash
Ltd.




                                                                                158
     (2) Combination cost and goodwill
                                                                         Sonyo Refrigeration
Item
                                                                          (Dalian) Co., Ltd.
Cash                                                                             145,285,500.00
FV of non-cash asset                                                                           -
FV of shareholding held prior to acquisition on acquisition date                               -
Total of combination cost                                                        145,285,500.00
Less: proportion of FV of identifiable net asset obtained                        107,228,836.48
The difference between goodwill/cost of combination less and
proportion of FV of identifiable net asset obtained                               38,056,663.52


     (3) Identifiable asset, liability of acquiree on acquisition date
                                                Sonyo Refrigeration (Dalian) Co., Ltd.
Items
                                      FV on acquisition date     BV on acquisition date
Assets:                                      780,585,239.05                      701,851,729.23
Monetary funds                               135,690,886.90                      135,690,886.90
Accounts receivable                          140,250,048.25                      140,250,048.25
Prepayment                                      5,562,914.24                       5,562,914.24
Inventory                                    299,313,831.40                      299,313,831.40
Other equity instrument investment              1,717,629.40                       1,336,959.00
Fixed asset                                  112,691,400.61                       50,374,134.76
Construction in process                         1,324,905.50                       1,324,905.50
Right-of-use asset                              6,736,919.97                       6,736,919.97
Intangible asset                               36,748,493.16                      20,712,919.59
Deferred tax asset                              7,512,572.08                       7,512,572.08
Other current asset                            33,035,637.54                      33,035,637.54
Liability:                                   673,356,402.57                      661,546,376.10
Accounts payable                             588,702,714.87                      588,702,714.87
Employee payable                               32,347,444.78                      32,347,444.78
Lease liability                                 7,287,087.48                       7,287,087.48
Deferred Tax liability                         11,810,026.47                                   -
Other current liability                        33,209,128.97                      33,209,128.97
Net asset                                    107,228,836.48                       40,305,353.13
les:Minority interest                                       -                                 -
Net asset obtained                           107,228,836.48                       40,305,353.13




                                                159
                   (4) Others

                        None.

            VIII. Interest in other entity

            1.Equity of subsidiaries

                   (1) Organization structure of group company

                            Registered       Main                                     Shareholding (%)
                                                       Registere                                           Obtaining
  Name of subsidiaries        capital       business                Business nature
                                                       d address                      Direct    Indirect    method
                            (10K)         address
Dalian Bingshan Group
                                30,000.00   Dalian      Dalian        Installation     100          -       Establish
Engineering Co., Ltd.
Chengdu Bingshan
Refrigeration                    1,000.00   Chengdu    Chengdu          Service         -          51       Establish

Engineering Co., Ltd.
Dalian Bingshan Group
                                 1,800.00   Dalian      Dalian         Trading         100          -       Establish
Sales Co., Ltd.
Dalian Bingshan
Air-conditioning                 8,254.00   Dalian      Dalian      Manufacturing      100          -       Establish

Equipment Co., Ltd.
Dalian Bingshan
Guardian Automation              5,070.07   Dalian      Dalian      Manufacturing      100          -       Establish

Co., Ltd.
Dalian
Bingshan-RYOSETSU
                                 5,757.87   Dalian      Dalian      Manufacturing      100          -       Establish
Quick Freezing
Equipment Co., Ltd.
Wuhan New World
Refrigeration Industrial        20,000.00   Wuhan       Wuhan       Manufacturing      100          -      Acquisition

Co., Ltd.
Wuhan New World
Air-conditioning
                                 3,500.00   Wuhan       Wuhan         Installation      -         100       Establish
Refrigeration
Engineering Co., Ltd
Wuhan Lanning Energy
                                 2,200.00   Wuhan       Wuhan          Trading          -         100      Acquisition
Technology Co., Ltd.
Dalian Universe Thermal          8,000.00   Dalian      Dalian      Manufacturing       55          -      Acquisition

                                                              160
  Name of subsidiaries        Registered     Main      Registere    Business nature   Shareholding (%)        Obtaining
                                capital     business   d address                                               method
Technology Co., Ltd.          (10K)       address
Dalian Bingshan
Engineering & Trading           3,000.00    Dalian      Dalian           Service       100          -         Acquisition

Co., Ltd
Sonyo Compressor
                               44,239.67    Dalian      Dalian        Manufacturing    100          -         Acquisition
(Dalian)Co., Ltd.
Sonyo Refrigeration
                               10,500.00    Dalian      Dalian        Manufacturing    100          -         Acquisition
System (Dalian) Co., Ltd.
Sonyo Refrigeration
                               21,208.47    Dalian      Dalian        Manufacturing    100          -         Acquisition
(Dalian) Co., Ltd.

                1)      All the proportion of shareholding in subsidiaries were the same with voting right.

                2)      The Company held over 50% voting right in subsidiaries and could control these
                subsidiaries with over 50% voting right.

                     (2) There are no significant non-subsidiaries.

           2.Change of equity share in subsidiary which is still under control

                     (1) Change of equity share in subsidiary

                             None.




                                                              161
         3.Equity in joint venture arrangement or associated enterprise

               (1) The important affiliated companies


                                                                              Shareholding (%)
                                    Main
 Name of joint ventures or                     Registered        Business                         Accounting
                                   business
   affiliated companies                         address           nature                           methods
                                   address
                                                                              Direct   Indirect


Dalian Fuji Bingshan                                                                                Equity
Vending Machine Co., Ltd            Dalian        Dalian      Manufacturing   49.00       -
                                                                                                   method
Jiangsu Jingxue Insulation                                                                          Equity
                                   Changzhou   Changzhou      Manufacturing   14.91       -
Technology Co., Ltd                                                                                method
Dalian Bingshan Metal                                                                               Equity
                                    Dalian        Dalian      Manufacturing   49.00       -
Technology Co., Ltd.                                                                               method
         1) The Company has the same percentage of shareholding and voting right in joint-venture or
             affiliated company.

         2) The Company doesn’t have joint venture or affiliated companies which have no significant
             influence although being held 20% or more voting rights.




                                                        162
        (2) The key financial information of affiliated companies

                                                                                         Closing balance/Current year

Items                                              Dalian Fuji Bingshan Vending            Jiangsu Jingxue Insulation       Dalian Bingshan Metal
                                                          Machine Co., Ltd                    Technology Co., Ltd            Technology Co., Ltd.

Current assets                                                        279,515,256.77                     1,513,841,724.68                334,413,727.30
Including: Cash and cash equivalents                                   18,195,178.30                       151,387,053.19                163.052.296.71
Non-current assets                                                    190,659,275.57                       301,638,618.76                 38,148,931.23
Total assets                                                          470,174,532.34                     1,815,480,343.44                372,562,658.53
Current liabilities                                                   300,289,317.09                       943,431,015.22                 58,315,558.14
Non-current liabilities                                                32,367,401.38                        40,353,776.15                             -
Total liabilities                                                     332,656,718.47                       983,784,791.37                 58,315,558.14
Total net asset                                                       137,517,813.87                       831,695,552.07                314,247,100.39
Minority interests                                                                   -                         274,736.66                             -
Equity to the parent company                                          137,517,813.87                       831,420,815.41                314,247,100.39
Share of net assets according to the
shareholding proportions                                               67,383,728.80                       123,964,843.58                153,981,079.19
Adjusting events                                                                     -                                  -                             -
—Goodwill                                                               226,689.29                         20,390,060.33                 19,269,770.94
—Unrealized profits of insider trading                                              -                                  -                             -
--Others                                                                             -                                  -                             -
Book value of equity investment of
affiliated companies                                                   67,610,418.09                       144,354,903.91                173,250,850.13



                                                                               163
                                                                                  Closing balance/Current year

Items                                         Dalian Fuji Bingshan Vending          Jiangsu Jingxue Insulation        Dalian Bingshan Metal
                                                   Machine Co., Ltd                    Technology Co., Ltd             Technology Co., Ltd.

Fair value of equity investment with public
offer                                                                         -                                   -                             -

Operating income                                               209,845,287.10                     1,152,098,034.96                 464,881,380.24
Financial expense                                               11,084,822.85                         1,934,530.46                  -2,682,355.04
Income tax expense                                                -353,797.35                         4,996,495.33                  10,449,723.61
Net profit                                                     -85,684,074.85                        38,019,504.83                  63,729,802.01
Net profit of discontinuing operation                                         -                                   -                             -
Other comprehensive income                                                    -                                   -                             -
Total comprehensive income                                     -85,684,074.85                        38,019,504.83                  63,729,802.01
The current dividends received from joint
ventures                                                                      -                        1,610,172.00                 33,134,422.30




                                                                        164
     (Continued)

                                                                                  Opening balance/Last year

Items                                         Dalian Fuji Bingshan Vending         Jiangsu Jingxue Insulation       Dalian Bingshan Metal
                                                   Machine Co., Ltd                   Technology Co., Ltd            Technology Co., Ltd.

Current assets                                                 447,012,221.67                    1,357,769,579.89                331,577,731.99
Including: Cash and cash equivalents                             8,768,885.75                      210,766,589.69                171,454,780.42
Non-current assets                                             220,481,862.47                      302,638,265.60                 36,680,264.69
Total assets                                                   667,494,084.14                    1,660,407,845.49                368,257,996.68
Current liabilities                                            391,692,836.48                      827,081,128.54                 49,800,779.28
Non-current liabilities                                         49,526,450.43                       29,830,925.61                             -
Total liabilities                                              441,219,286.91                      856,912,054.15                 49,800,779.28
Total net asset                                                226,274,797.23                      803,046,200.14                318,457,217.40
Minority interests                                                            -                        449,591.20                             -
Equity to the parent company                                   226,274,797.23                      803,046,200.14                318,457,217.40
Share of net assets according to the
                                                               110,874,650.64                      119,734,188.43                156,044,036.52
shareholding proportions
Adjusting events                                                              -                                 -                             -
—Goodwill                                                         226,689.29                       20,390,060.33                 19,269,770.94
—Unrealized profits of insider trading                                       -                                 -                             -
--Others                                                                                                        -                             -
Book value of equity investment of
                                                               111,101,339.93                      140,124,248.76                175,313,807.46
affiliated companies
Fair value of equity investment with public                                   -                                 -                             -


                                                                        165
                                                                                Opening balance/Last year

Items                                       Dalian Fuji Bingshan Vending         Jiangsu Jingxue Insulation       Dalian Bingshan Metal
                                                 Machine Co., Ltd                   Technology Co., Ltd            Technology Co., Ltd.

offer
Operating income                                             175,460,421.16                      902,517,681.24                433,120,778.54
Financial expense                                             10,357,794.72                          854,477.47                 -7,161,210.92
Income tax expense                                               -10,755.71                        2,621,080.54                  9,728,042.54
Net profit                                                     2,430,819.76                       39,722,362.41                 62,395,419.10
Net profit of discontinuing operation                                       -                                 -                             -
Other comprehensive income                                                  -                                 -                             -
Total comprehensive income                                     2,430,819.76                       39,722,362.41                 62,395,419.10
The current dividends received from joint
                                                                            -                      4,732,344.00                 23,402,022.05
ventures




                                                                      166
                (3) Summary financial information of insignificant affiliated companies

                                   Items                          Current year                 Last year
               Affiliated company                                         —                       —
               Total book value of investment of affiliated
               companies                                            136,058,775.37             123,418,337.24
               The total of following items according to the
               shareholding proportions                                   —                       —
                    Net profit                                           3,826,157.59           28,021,453.13
                    Other comprehensive income                                      -                         -
                    Total comprehensive income                           3,826,157.59           28,021,453.13

               (4) Significant restrictions of the ability of affiliated companies transferring funds to
                      the Company.

                      No.

               (5) Contingency related to joint venture or affiliated company need to be disclosed.

                      No.

           IX. Government Grant

               1.   Liability item involved in government grant

                                              Into non-                     The value                       Related to
                Opening                                    Into other                         Closing
  Items                         Increase      operating                     offset cost                       asset/
                Balance                                     income                            Balance
                                               income                      and expense                       income
Deferred
             82,332,725.05     4,438,585.80           -    3,850,546.24                 -   82,920,764.61     asset
income
Deferred                                                                                                    asset/inco
income       17,421,621.34      487,400.00            -    2,555,518.15                 -   15,353,503.19
                                                                                                                  me
Deferred
                          -    5,596,143.93           -    5,596,143.93                 -               -    income
income
Total        99,754,346.39    10,522,129.73           -   12,002,208.32                 -   98,274,267.80         —


               2.   Recognized in income statement

                                   Items                          Current year                 Last year
                    Other income                                        12,002,208.32             6,473,525.00
                    Administration expense                                          -            -5,306,977.43




                                                          167
X. Risk Related to Financial Instruments

The main financial instruments held by the group are borrowings, accounts receivable, accounts
payable, other non-current financial asset etc. The detailed explanation is referred to the note
No.VI. The related risks of these financial instruments and the risk management policy
conducted to reduce these risks by the group are introduced as below. The group management
conducts to manage and monitor these risks exposure and control these risks under certain risk
level.

   1. Objectives and policies of each risk management

The objectives of risk management conducted by the Company are to reach the balance between
risk and profit return by reducing the negative influence to operating performance to the
minimum level as well as maximizing the shareholders’ and other investors’ profits. Based on
these objectives, the basic risk management policy is to recognize and analyze all sorts of risk
that the Company faced with, to set up the proper risk tolerance bottom line conducting risk
management, as well as to monitor these risks in a timely and effective manner, and to ensure
these risks under the limit level.

     (1) Market risk
         1) Exchange rate risk

Most of the Company’s business is located in China, and settled with RMB. But the Company
defined exchange rate risk of assets, liabilities dominated in foreign currency and future
transaction dominated in foreign currency (mainly including USD, JPY, EURO, HKD and GBP).
The financial department of the Company monitors the Company’s foreign currency transaction
and the scale of foreign assets and liabilities, and decreases exchange rate risk. During the
current year the Company did not agree any forward foreign exchange contract or currency
swap contract .As at 31st December 2023, the Company’s assets and liabilities dominated in
foreign currency are listed in RMB as following:




                                              168
Items                                        December 31, 2023             December 31, 2022
Monetary fund-USD                                          5,900,837.69            5,254,881.87
Monetary fund-JPY                                          5,352,282.10            1,367,327.65
Monetary fund- EURO                                         346,986.51             1,354,512.09
Monetary fund- HKD                                           84,495.39                         -
Receivable -USD                                       50,158,313.38               40,859,881.78
Receivable -JPY                                            3,847,098.27            2,715,738.67
Receivable - EURO                                          5,426,571.06            7,467,708.34
Payables -USD                                              7,966,726.35            5,849,006.89
Payables -JPY                                              1,794,696.33            1,873,402.54
Payables - GBP                                                         -             312,884.03
The group paid close attention to the effect on FX risk.

        2) Interest rate risk
The interest risk of the group incurred from bank loan, risk of a floating interest rate of financial
liabilities that lead to the group facing cash flow interest rate risk, financial liabilities with a fixed
interest rate lead to the group facing cash flow interest rate risk. The company determined the proportion
of fixed interest rate and floating interest rate according the current market circumstance. The group’s
interest-bearing debt is borrowings of RMB 799,000,000.00 at fixed interest rate as of December
31,2023(borrowings of RMB 740,000,000.00 in2022).

The financial department of the group continuously monitors the interest rates level, and the
management would make some adjustment to lower the interest rate risk according to the latest market
situation. Climbing interest rate will increase the cost of newly increased interest-bearing liability and
interest expense for unsettled interest-bearing liability at floating rate and have adverse effect on the
business performance.

The sensitive analysis:

As at 31st December 2023, based on the assumption of interest rate change of 50 BP, the group’s net
profit of current year will increase or decrease3.9955 million Yuan.

        3) Price risk
The price risk of the Company is mainly commodity price risk. The Company sells products at market
prices. As the national economy enters the "new normal", the manufacturing industry is under great
economic downward pressure, and the drastic fluctuations of bulk material prices have a certain impact
on the group 's operations.

    (2) Credit risk

                                               169
The credit risk of the group comes from monetary fund, notes receivable, accounts receivable, and other
accounts receivable etc. The management made credit policies and monitored changes of this credit
exposure.

The group 's monetary fund was in bank with higher credit rating, so there was no significant credit risk,
nor significant losses due to the default of other entity. Upper limit policy is adopted to avoid any credit
risk from financial institution.

The group made relevant policy to control credit risk exposure from receivable, other receivable and
notes receivable. The group assesses the client’s credit background according to the client’s financial
performance, possibility of obtaining guarantee from the 3rd party, credit record and other factors such
as current market. The group will periodically monitor the credit situation of the client and will take
measures such as prompt letter, shorten credit period or cancel the credit to ensure the overall credit risk
within the controllable scope.

As at 31st December 2023, the top five customers of receivable accounts balance are
240,544,632.79Yuan.

     (3) Liquidity risk

Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfills the
obligation of settlement by cash or other financial assets. The way to manage the liquidity risk is to
ensure enough fund available to fulfill the liability by due date in prevention from unacceptable loss of
or reputation damage to the group. The group periodically analyze the liability structure and expiry date
and the financial department of the group continued to monitors the short term or long-term capital
needs to ensure maintain plenty of cash flow. And the same time they also monitor the condition of bank
loan agreements and obtain commitments from banks to reduce liquidity risks.

The fund mainly comes from bank loan. By December 31st, 2023, the credit limit still available is 618.30
million Yuan and short-term credit limit available is 618.30 million Yuan.

As at 31st December 2023, the group’s financial assets and financial liabilities in line with
non-discounted cash flow of the contracts as following:




                                                170
                                                                             Currency unity:10kYuan

                               Within 1
Items                                         1-2 years    2-5 years   Over 5 years      Total
                                 year
Financial Assets                 —              —           —           —             —
Cash and cash in bank           95,103.96              -           -              -      95,103.96
Notes receivable                35,342.89              -           -              -      35,342.89
Accounts receivable            157,643.39              -           -              -     157,643.39
Financing receivable            30,358.52              -           -              -      30,358.52
Other Receivable                 4,138.17              -           -              -       4,138.17
Contract asset                  23,707.69              -           -              -      23,707.69
Other current asset              2,607.43              -           -              -       2,607.43
Other non-current
                                          -            -           -      16,402.48      16,402.48
financial asset
Financial Liabilities            —              —           —           —             —
Short-term loan                 26,228.78              -           -              -      26,228.78
Notes Payable                   67,072.10              -           -              -      67,072.10
Accounts payable               165,583.54              -           -              -     165,583.54
Other payable                   27,880.42              -           -              -      27,880.42
Employee’s payable             14,949.71              -           -              -      14,949.71
Tax payable                      2,221.65              -           -              -       2,221.65
Non-current        liability
                                15,064.53              -           -              -      15,064.53
due within 1 year
Long-term loan                            -   34,600.00    32,570.00        800.00       67,970.00
Lease obligation                          -      561.13      881.77         970.60        2,413.50
Long-term payable                         -      208.75      824.44               -       1,033.19




                                                 171
   2. Financial asset transfer

        (1) Classified by transfer method



  Transfer
                           Nature               Amount         Derecognition    Basis for derecognition
   method


                  Bank acceptance
Endorsement                                                                     All risk and reward
                  bill with high credit     374,572,818.64          Y
of a bill                                                                       have been transferred
                  rating
                  Bank acceptance
Discounting                                                                     All risk and reward
                  bill with high credit     151,620,157.02          Y
a bill                                                                          have been transferred
                  rating
                  Bank/trade
Endorsement                                                                     Retain mostly risk and
                  acceptance bill with
/discounting                                151,582,675.36          N           reward including
                  non-high credit
of a bill                                                                       default risk
                  rating
                                                                                All risk and reward
Factoring         Receivable                   10,000,000.00        Y
                                                                                have been transferred

Total                       —              687,775,651.02          —                    —

        (2) Derecognized financial asset due to transfer



                                                                 Derecognized         Gain/loss from
               Item                     Transfer method
                                                                   Amount              derecognition


Bank acceptance bill with
                                    Endorsement of a bill        374,572,818.64                         -
high credit rating

Bank acceptance bill with
                                    Discounting a bill           151,620,157.02          -1,944,537.05
high credit rating
                                    Factoring without
Receivable                                                        10,000,000.00                         -
                                    recourse

Total                                          —                536,192,975.66          -1,944,537.05


XI. Disclosure of Fair Value
 1. Amount and measurement level of the assets and liabilities measured at fair value at the year
    end
                                                    172
                                                 Fair value at the year end

                            1st level           2nd level           3rd level
Items
                       measurement of        measurement of      measurement of          Total
                              FV                  FV                  FV

Financial assets
Continuously                            —                  —                  —               —
measured at FV


Receivable financing                     -   303,585,218.53                      -   303,585,218.53

Other non-current
                        162,340,919.04                       -     1,683,852.59      164,024,771.63
financial asset

Total                   162,340,919.04       303,585,218.53        1,683,852.59      467,609,990.16

 2. Basis for Market price of first level measurement of fair value

 Equity instrument portion of the other noncurrent financial asset is measured at the unadjusted
 closing quoted price of Guotai Junan shares on stock market on December 29, 2023.

 3. For continuous and discontinuous 2nd level of FV, valuation technique adopted and
 key parameter quantitive and qualitive information.

 Bank acceptance notes (receivable financing) as measured at fair value through other
 comprehensive income is within this scope. Bank acceptance notes held by the group mainly
 are high credit grading from the large commercial bank. As the remaining maturity is short and
 credit risk is very low, on the balance sheet date, the book value of bank acceptance notes
 receivable is similar to fair value.

 4. For continuous and discontinuous 3rd level of FV, valuation technique adopted and
 key parameter quantitive and qualitive information.

 As of December 31, 2023, the book value of the share investment in Guotai Junan Investment
 Management Co.,Ltd and Wuhan Steel and Power Co.,Ltd is 1,683,852.59 Yuan. It is
 presented as other non-current financial asset in accordance with No.22- financial instrument
 recognition and measurement of Accounting Standards for Business Enterprises. Having
 considered there is neither active market for invested company’s share nor market price is
 available for reference, and it is not feasible to obtain the relevant observable input value. FV
 of the investment is measured at cost by taking influence factor of FV into consideration.

 5. For continuous 3rd level of FV, adjusted information of opening and closing balance
 and sensitivity analysis of unobservable parameter.

                                                 173
 No.

 6. Assets continuously measured at fair value have switched among different level during
   the year.

 No.

 7. Changes of valuation technique and reasons for changes

 No.

 8. Assets and liability are disclosed at FV rather than measured at FV

 No.

XII. Related Parties Relationship and Transactions

       i.    Related parties’ relationship

 1. Controlling shareholder and ultimate controller

   (1) Controlling shareholder and ultimate controller

                                                                                        Voting
                                                                     Shareholding
Parent             Registered        Business           Registered                      power
                                                                      percentage
company             address           nature       capital(10K)                     percentage
                                                                         (%)
                                                                                          (%)

Dalian
Bingshan
                     Dalian         Manufacture         15,858.00       20.27            20.27
Group Co.,
Ltd.

Note: Dalian Bingshan Group Co., Ltd. is a Sino –foreign joint venture located No.106 Liaohe
East Road, DDZ, Dalian, China. The legal representative of Dalian Bingshan Group Co., Ltd. is
Mr. Ji Zhijian, and the registered capital is RMB158.58 million. The registered business
operation period is from 3rd July 1985 to 2nd July 2035. The business scope includes research,
development, manufacture, sales, service and installment of refrigeration equipment, cooling
and freezing equipment, different size of air-conditioners, petrochemical equipment, electronic
and electronic- control products, home electronic appliance, environment protect equipment and
etc. (unless the licenses needed)

The Company’s ultimate controller is Dalian Bingshan Group Co., Ltd.

 2. Subsidiaries

Referrer to the content in the Note “VIII. 1. (1) Organization structure of group company”.

                                                  174
        3. Affiliated company and joint venture

      The information of the affiliated company and joint venture please refers to the note “VIII. 3.(1)
      The significant affiliated company and joint venture’. The Company had transactions with
      related parties during the current period or last period, including:

       Names of the joint ventures or affiliated company            Relationships with the Company
       Keinin-Grand Ocean Thermal Technology (Dalian)
                                                                   Affiliated company of the Company
       Co., Ltd.
       Dalian Fuji Bingshan Vending Machine Co., Ltd.              Affiliated company of the Company
       Dalian Fuji Bingshan Vending Machine Sales Co.,
                                                                   Affiliated company of the Company
       Ltd.
       Jiangsu Jingxue Insulation Technology Co., Ltd.             Affiliated company of the Company

       MHI Bingshan Refrigeration (Dalian) Co., Ltd.               Affiliated company of the Company

       Dalian Honjo Chemical Co., Ltd.                             Affiliated company of the Company

       Dalian Bingshan Metal Technology Co., Ltd.                  Affiliated company of the Company
       Dalian Bingshan Group Huahuida Financial Leasing
                                                                   Affiliated company of the Company
       Co., Ltd.
       Wuhan Sikafu Power Control Equipment Co., Ltd.              Affiliated company of its subsidiary
       Dalian Bingshan Group Huayida Commercial
                                                                   Subsidiary of its affiliated company
       Factoring Co., LTD
       Dalian Jingxue Freezing Equipment Co., Ltd.                 Subsidiary of its affiliated company

       Shanghai Jingxue Freezing Equipment Co., Ltd.               Subsidiary of its affiliated company

       Jiangsu Jingxue Insulation Environmental
                                                                   Subsidiary of its affiliated company
       Engineering Co., Ltd.


        4. Other related parties

             Name of related party                                      Related party relationship
Company under direct/indirect Control of Panasonic           Both parties are under the control of or significant
Co., Ltd                                                                influence by the same party
                                                             Both parties are under the control of or significant
Sanyo Corporation
                                                                        influence by the same party
Panasonic Corporation of China Co., Ltd                       Directors of the Company also serve as directors
                                                             Both parties are under the control of or significant
Dalian Spindle Environmental Facilities Co., Ltd.
                                                                        influence by the same party
LINDE HYDROGEN FUELTECH (DALIAN) CO.,                        Both parties are under the control of or significant
LTD.                                                                    influence by the same party
                                                             Both parties are under the control of or significant
Dalian Shentong Electric Co., Ltd.                           influence by the same party from January to April,
                                                                                    2023
                                                             Both parties are under the control of or significant
Dalian Fuji Bingshan Control System Co., Ltd.
                                                                        influence by the same party

                                                       175
                  Name of related party                                Related party relationship
                                                            Both parties are under the control of or significant
BAC Dalian Co., Ltd.
                                                                       influence by the same party
                                                            Both parties are under the control of or significant
Dalian Bingshan Wisdom Park Co., Ltd
                                                                       influence by the same party
Dalian Bingshan Part Technology Co., LTD.                  Under control of the same ultimate controlling party
Alphavita Bio-scientific (Dalian) Co., Ltd.                Under control of the same ultimate controlling party
Bingshan Technology Service (Dalian) Co., Ltd.           Under control of the same ultimate controlling party
                                                           Directors and senior officers of the Company serve
                                                                 as directors and senior officers in Dalian
Dalian Zhonghuida Refrigeration Technology Co., Ltd
                                                             Zhonghuida Refrigeration Technology Co., Ltd
                                                                                 Company
                                                            Both parties are under the control of or significant
Sonyo Cold Chain (Dalian) Co., Ltd.                             influence by the same party from April to
                                                                              December, 2023

      Note: Companies under direct/indirect Control of Panasonic Co., Ltd are:

      Panasonic Electric Taiwan Co.,Ltd,      Wanbao(Guangzhou) Compressor Co.,Ltd, Panasonic
      Electronic Devices(Jiangmen)Co.,Ltd, Panasonic R&D Center Suzhou Co.,Ltd Dalian Branch,
      Panasonic Procurement(CHINA)Co.,Ltd, Panasonic Industry (China) Co., Ltd. Panasonic
      Corporation, Panasonic Industry (China) Co., Ltd Shanghai Branch, Beijing 2nd Branch of
      Panasonic Electric Equipment (China)Co.,Ltd, Panasonic Electric Equipment (China)Co.,Ltd,
      Panasonic Appliances Air-Conditioning and Refrigeration Corporation, Panasonic Appliances
      Microwave Oven(Shanghai) Co.,Ltd, Panasonic Motor(Hangzhou)Co.,Ltd., Panasonic Home
      Appliances Air-Conditioning(Guangzhou)Co.,Ltd., Panasonic Hong Kong Co., Limited,
      PANASONIC PROCUREMENT (CHINA) CO., LTD. Sonyo Refrigeration (Dalian) Co.,
      Ltd.(Jan-May, 2023), Sonyo Cold Chain (Dalian) Co., Ltd.( (Jan-Mar, 2023).

      Panasonic Appliances Air-Conditioning Malaysia SDN BHD, Panasonic Taiwan CO.,LTD.,
      Panasonic Sales Taiwan CO.,LTD, Panasonic Procurement Malaysia SDN BHD, Panasonic
      Hong Kong Co.,Ltd, Panasonic Operational Excellence Co.,Ltd.(Pex), Panasonic Life Solutions
      India, Panasonic Industry Sales Asia, Panasonic Industry Europe GmbH, Panasonic Industrial
      Devices Sales, Panasonic India Pvt Ltd(APIN), Panasonic Global Procurement, Panasonic
      DoBrasil Limited–Miam, Panasonic Corporation Appliances Company Heating&Cooling
      Solutions Bd Commercial Air-Conditioning, Panasonic Corporation Appliances Company,
      Panasonic Corporation, Panasonic Commercial Equipment Systems Taiwan Co.Ltd, Panasonic
      Commercial Equipment Systems Asia, Panasonic Automotive&Industrial, Panasonic Appliances
      Air-Conditioning Malaysia Sdn.BHD, Panasonic Appliances Air-Conditioning, Pacific.
      Panasonic Commercial Equipment Systems Asia Pacific, Panasonic Heating&Ventilation,
      Panasonic Appliances Air-conditioning, Panasonic A.P. SALES (THAILAND) CO., LTD

            ii.     Related Party transactions

        1. Purchase of goods, offer and receive labour services etc inter-group transactions

                                                     176
    (1)    Purchase of goods/receive labour services

Related party                                Content          Current year        Last year
Dalian Bingshan Metal Technology
                                         Purchases of goods    63,809,032.17      10,017,493.41
Co., Ltd.
Sonyo Cold Chain (Dalian)Co. Ltd         Purchases of goods    40,499,927.26        135,529.36
Jiangsu Jingxue Insulation
                                         Purchases of goods    28,067,092.90       5,390,801.78
Technology Co., Ltd.
BAC Dalian Co., Ltd.                     Purchases of goods    18,579,088.19      32,827,251.97
Company under direct/indirect
                                         Purchases of goods    13,763,555.55      24,447,037.82
Control of Panasonic Co., Ltd
Dalian Bingshan Part Technology
                                         Purchases of goods    10,775,437.38      10,938,171.74
Co., LTD.
Dalian Honjo Chemical Co., Ltd           Purchases of goods    10,305,185.60        140,522.12
Bingshan Technology Service
                                         Purchases of goods     5,575,811.09       2,047,836.64
(Dalian) Co., Ltd.
Dalian Fuji Bingshan Control System
                                         Purchases of goods     5,029,475.45       1,718,811.27
Co., Ltd.
Alphavita Bio-scientific (Dalian) Co.,
                                         Purchases of goods     4,466,987.61                  -
Ltd.
Bingshan Technology Service                Receive labor
(Dalian) Co., Ltd.                         services           2,011,933.16        303,037.68
Dalian Shentong Electric Co., Ltd.       Purchases of goods     1,680,077.95       9,480,036.79
Company under direct/indirect              Receive labor
Control of Panasonic Co., Ltd                 services          1,621,316.09                  -
Dalian Fuji Bingshan Vending
                                         Purchases of goods      505,497.50         753,944.37
Machine Co., Ltd
Dalian Spindle Environmental
                                         Purchases of goods      780,949.56        1,407,486.73
Facilities Co., Ltd
Dalian Bingshan Wisdom Park Co.,
                                         Purchases of goods       80,441.60         100,943.39
Ltd
Dalian Bingshan Wisdom Park Co.,           Receive labor
Ltd                                          services             47,169.81                   -
Dalian Fuji Bingshan Vending
                                         Purchases of goods       35,398.23           78,761.06
Machine Sales Co., Ltd
                                           Receive labor
Dalian Bingshan Group Co., Ltd.                                   24,452.83           18,792.45
                                             services
Shanghai Jingxue Freezing
                                    Purchases of goods                       -        19,584.07
Equipment Co., Ltd
Sonyo Refrigeration System (Dalian)
                                    Purchases of goods                       -     4,947,268.89
Co., Ltd.
Sonyo Compressor (Dalian) Co., Ltd. Purchases of goods                       -      429,782.52
Total                                           —            207,658,829.93     105,203,094.06

    (2)    Sales of goods/ labour services provision

Related party                                   Content        Current year       Last year
Company under direct/indirect Control
                                             Sales of goods    285,292,151.76 147,935,120.42
of Panasonic Co., Ltd
Sonyo Cold Chain (Dalian) Co., Ltd           Sales of goods    138,639,729.84 122,871,855.60
                                               177
Related party                                 Content         Current year       Last year
BAC Dalian Co., Ltd                        Sales of goods      69,977,098.57     65,002,512.47
Bingshan Technology Service (Dalian)
                                           Sales of goods      32,203,558.67     40,641,988.78
Co., Ltd.
Dalian Fuji Bingshan Vending Machine
                                           Sales of goods      16,843,047.06     18,327,608.54
Co., Ltd

Dalian Bingshan Wisdom Park Co., Ltd       Sales of goods      13,402,551.72       323,553.82

MHI Bingshan Refrigeration (Dalian)
                                           Sales of goods       7,181,290.12      5,537,667.76
Co., Ltd.
Alphavita Bio-scientific (Dalian) Co.,
                                           Sales of goods       4,522,436.41      9,532,891.46
Ltd.
Dalian Spindle Environmental Facilities
                                           Sales of goods       3,665,307.02      3,240,535.34
Co., Ltd
Dalian Honjo Chemical Co., Ltd             Sales of goods       1,863,564.01        91,981.13
Dalian Bingshan Part Technology Co.,
                                           Sales of goods       1,742,813.23      1,395,237.01
LTD
Linde Hydrogen Fueltech (Dalian) Co.,
                                           Sales of goods        794,939.42       1,309,485.55
Ltd
Dalian Fuji Bingshan Control System
                                          Sales of services      414,608.77                  -
Co., Ltd.
Dalian Fuji Bingshan Control System
                                           Sales of goods        153,752.97        654,160.22
Co., Ltd.
Dalian Bingshan Wisdom Park Co., Ltd      Sales of services      141,509.43                  -
Dalian Shentong Electric Co., Ltd          Sales of goods        120,092.03        522,107.10
Dalian Jingxue Freezing Equipment Co.,
                                           Sales of goods         96,698.39        102,957.82
Ltd
Dalian Bingshan Group Co., Ltd.           Sales of service        43,018.86                  -
Dalian Bingshan Group Co., Ltd.            Sales of goods         26,445.02                  -
Sonyo Compressor (Dalian)Co., Ltd.         Sales of goods                    -   41,055,441.71
Sonyo Refrigeration System (Dalian)
                                           Sales of goods                    -   23,645,169.22
Co., Ltd.
Dalian Bingshan Group Huahuida
                                           Sales of goods                    -   18,888,460.18
Financial Leasing Co., Ltd
Jiangsu Jingxue Insulation Technology
                                           Sales of goods                    -    2,524,416.77
Co., Ltd
Total                                              —         577,124,613.30 503,603,150.90

       (3)   Assets Lease

                                             178
    (1)    Assets rent out


                                       Category of         Current year        Last year Lease
              Lessee
                                      assets rent out      Lease Income             Income

Dalian Bingshan Wisdom Park
Co., Ltd                               Land/property           9,013,347.56          8,189,918.99
MHI Bingshan Refrigeration
(Dalian) Co., Ltd.                           Plant             3,809,523.80          3,809,523.80
Linde Hydrogen Fueltech
(Dalian) Co., Ltd                            Plant             2,360,040.71          2,759,026.37
Sonyo Cold Chain (Dalian)Co.         Plant /Employee
Ltd                                                            2,160,513.31          3,465,470.95
                                        dormitory
Company under direct/indirect         Plant/ office /
Control of Panasonic Co., Ltd                                  1,483,508.26            336,180.42
                                        dormitory
Dalian Jingxue Freezing
Equipment Co., Ltd.                   Plant and office           784,927.88            858,322.40
Wuhan Sikafu Power Control
Equipment Co., Ltd                           Plant               721,045.88            730,954.13
Bingshan Technology Service
(Dalian) Co., Ltd.                  Plant and office           355,081.77            443,699.06
Dalian Bingshan Part
                                      Plant and office           194,954.13                         -
Technology Co., Ltd.
Dalian Bingshan Group Co.,
                                            Office                66,055.05            132,110.09
Ltd.
Dalian Spindle Environmental
Facilities Co., Ltd.                        Office                20,069.72                         -

    (2)    Assets under lease


                                                 Category of            Lease premium paid
                    Lessor
                                                assets rent in      Current year      Last year
 Dalian Bingshan Group Huahuida
                                                 Fixed asset        25,173,657.70   28,659,750.85
 Financial Leasing Co., Ltd

      (Continued)

                              Interests on lease liabilities        Increased right-of-use assets
          Lessor
                             Current year        Last year         Current year      Last year
 Dalian Bingshan
 Group Huahuida
 Financial Leasing Co.,       2,067,080.20           698,321.11                 - -26,150,305.01
 Ltd

    (4)    Warranty provided by Related Parties

The national development fund planned to support the Company’s intelligent and green
equipment of cold chain and service industry base project, and provide the special fund to the

                                                 179
controlling shareholder of the Company, Bingshan Group. Please refer to the “Note VI. 33 long
term borrowings”.

Funds borrow from /lent to related party
                                                    Starting      Ending
 Name of the related party         Amount                                      Explanation
                                                      date         date
 Dalian Bingshan Group                                                         Project fund
 Co., Ltd.                      160,000,000.00     2016.03.14   2026.03.13     investment
 Dalian Bingshan Group
 Huahuida Financial              32,833,000.00     2022.09.29   2024.09.28       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huayida Commercial              15,000,000.00     2023.12.25   2024.12.24       Factoring
 Factoring Co., Ltd
 Dalian Bingshan Group
                                                                                  Sale and
 Huahuida Financial              13,805,309.73     2021.11.10   2026.11.09       leaseback
 Leasing Co., Ltd
 Dalian Bingshan Group
                                                                                  Sale and
 Huahuida Financial              12,000,000.00     2022.01.07   2025.01.06       leaseback
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial              10,000,000.00     2023.01.09   2024.01.08       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial              10,000,000.00     2021.05.20   2024.05.19       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
                                                                                  Sale and
 Huahuida Financial               6,600,000.00     2023.02.24   2025.02.23       leaseback
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial               5,481,000.00     2022.06.20   2024.06.19       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial               4,559,849.17     2023.08.31   2024.08.30       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial               3,499,485.17     2023.10.10   2024.10.09       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huayida Commercial               2,367,580.50     2023.12.22   2024.12.21       Factoring
 Factoring Co., Ltd
 Dalian Bingshan Group
                                                                                  Sale and
 Huahuida Financial               1,876,663.49     2021.06.10   2024.06.09       leaseback
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial               1,531,366.55     2023.09.08   2024.09.07       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial                 731,470.43     2023.10.17   2024.10.16       Factoring
 Leasing Co., Ltd
 Dalian Bingshan Group
 Huahuida Financial                 499,200.00     2023.05.22   2024.05.21       Factoring
 Leasing Co., Ltd

                                             180
 Dalian Bingshan Group
 Huayida Commercial                  422,547.10        2023.12.08      2024.06.07     Factoring
 Factoring Co., Ltd
 Dalian Bingshan Group
 Huayida Commercial                  237,454.60        2023.12.05      2024.06.04     Factoring
 Factoring Co., Ltd
 Dalian Bingshan Group
 Huayida Commercial                  163,920.00        2023.12.15      2024.12.14     Factoring
 Factoring Co., Ltd

      (5)   Asset transfer and debt restructuring among the related parties

Item                                  Transaction              Current year          Last year
                               Purchase shareholdings of
Sanyo Corporation                                                   87,171,300.00   929,148,000.00
                               affiliated company
Panasonic Corporation of       Purchase shareholdings of
                                                                    58,114,200.00    44,582,760.00
China Co., Ltd                 affiliated company
Dalian Bingshan Group Co., Sold shareholdings of
                                                                                -    14,756,300.00
Ltd                            subsidiary
Dalian Zhonghuida
                               Sold shareholdings of
Refrigeration Technology                                                        -     6,472,000.00
                               subsidiary
Co., Ltd
Panasonic Corporation of       Sold shareholdings of
                                                                                -    70,990,000.00
China Co., Ltd                 affiliated company
Sonyo Cold Chain (Dalian)      Purchase shareholdings of
                                                                                -    37,152,300.00
Co., Ltd                       affiliated company
Total                                       —                  145,285,500.00 1,103,101,360.00

The 13rd meeting of the 9th directors’ meeting approved the acquisition of 40% of the
shareholdings of Sonyo Refrigeration (Dalian) Co. Ltd which is held by Panasonic Corporation
of China Co., Ltd, and 60% shareholdings of Sonyo Refrigeration (Dalian) Co. Ltd which is
held by Sanyo Electric (China) Co., Ltd. The share transfer price is based on the assessed value
of net assets of Sonyo Refrigeration (Dalian)Co. Ltd on March 31, 2023, and the transfer price
is 145.2855 million Yuan, of which 87.1713 million Yuan to Panasonic Corporation of China
Co., Ltd and 58.1142 million Yuan to Sanyo Electric (China) Co., Ltd. After the transaction,
Sonyo Refrigeration (Dalian) Co. Ltd becomes the subsidiary of the Company.




                                                 181
      (6)       Management Remuneration

  Item                                              Current year                  Last year
  Total remuneration                                      5,033,700.00                4,895,800.00

      (7)       Other transactions with related party

                None

         iii.    Balances with Related party

 1.Accounts receivable due from related parties

                                                                        Closing Balance
         Item                      Related party                                      Bad debt
                                                              Book Balance
                                                                                      Provision
Accounts receivable Sonyo Cold Chain (Dalian)Co.               84,045,272.25          4,997,695.76
                    Ltd
Accounts receivable BAC Dalian Co., Ltd                        28,426,981.24          1,995,574.08
Accounts receivable Company under direct/indirect              12,595,875.91            174,589.96
                    Control of Panasonic Co., Ltd
Accounts receivable Dalian Bingshan Wisdom Park                10,199,546.41            807,170.38
                    Co., Ltd
Accounts receivable Dalian Fuji Bingshan Vending                   6,270,661.55         440,200.44
                    Machine Co., Ltd
Accounts receivable MHI Bingshan Refrigeration                     3,390,197.07         237,991.83
                    (Dalian) Co., Ltd.
Accounts receivable Alphavita Bio-scientific (Dalian)              2,791,425.71         200,691.99
                    Co., Ltd.
Accounts receivable Dalian Bingshan Part Technology                1,606,085.44           52,796.80
                    Co., LTD
Accounts receivable Dalian Spindle Environmental                   1,072,064.56           75,258.93
                    Facilities Co., Ltd
Accounts receivable Bingshan Technology Service                     965,375.22            67,769.34
                    (Dalian) Co., Ltd.
Accounts receivable Linde Hydrogen Fueltech                         909,470.99          139,380.02
                    (Dalian) Co., Ltd
Accounts receivable Dalian Bingshan Group Huahuida                  138,450.00             9,719.19
                    Financial Leasing Co., Ltd
Accounts receivable Dalian Fuji Bingshan Control                     54,200.00             6,410.69
                    System Co., Ltd.
                    Bingshan Technology Service
Other receivable                                                    100,000.00          100,000.00
                    (Dalian) Co., Ltd.
                    Dalian Fuji Bingshan Vending
Other receivable    Machine Co., Ltd                                 48,000.00             7,608.00
                    Wuhan Sikafu Power Control
Other receivable    Equipment Co., Ltd.                               4,287.61                156.93

Prepayment          Jiangsu Jingxue Insulation
                    Technology Co., Ltd.                           4,088,975.80                    -

Prepayment          Company under direct/indirect
                    Control of Panasonic Co., Ltd                  1,152,192.68                    -

                                                   182
                                                               Closing Balance
       Item                   Related party                                Bad debt
                                                        Book Balance
                                                                           Provision
                     Sonyo Cold Chain (Dalian)Co.
Prepayment                                                  636,235.00                   -
                     Ltd
Prepayment           BAC Dalian Co., Ltd                    216,191.11                   -
                     Dalian Fuji Bingshan Vending
Prepayment           Machine Co., Ltd                       176,869.45                   -
                     Dalian Fuji Bingshan Vending
Prepayment           Machine Sales Co., Ltd.                 77,000.00                   -
                     Bingshan Technology Service
Prepayment           (Dalian) Co., Ltd.                    74,297.11                   -

Prepayment           Dalian Bingshan Part Technology
                     Co., LTD                                13,806.00                   -
Contract asset       Dalian Bingshan Wisdom Park
                     Co., Ltd                               550,000.00           38,610.00

      (Continued)

                                                              Opening Balance
       Item                   Related party                                Bad debt
                                                        Book Balance
                                                                           Provision
Accounts receivable Company under direct/indirect       145,605,125.57     11,219,927.46
                    Control of Panasonic Co., Ltd
Accounts receivable BAC Dalian Co., Ltd                  17,739,655.64      1,245,323.82
Accounts receivable Dalian Fuji Bingshan Vending          7,292,421.55       548,862.49
                    Machine Co., Ltd
Accounts receivable Bingshan Technology Service           5,804,599.87       426,864.25
                    (Dalian) Co., Ltd.
Accounts receivable MHI Bingshan Refrigeration            3,981,739.22       279,518.10
                    (Dalian) Co., Ltd.
Accounts receivable Dalian Bingshan Part Technology       2,426,739.72       250,341.12
                    Co., LTD
Accounts receivable Dalian Bingshan Group Huahuida        2,411,867.26       169,313.08
                    Financial Leasing Co., Ltd
Accounts receivable Alphavita Bio-scientific (Dalian)     1,224,109.36           85,932.48
                    Co., Ltd.
Accounts receivable Dalian Bingshan Wisdom Park           1,139,243.27       255,895.91
                    Co., Ltd
Accounts receivable Linde Hydrogen Fueltech                841,284.21            59,058.15
                    (Dalian) Co., Ltd
Accounts receivable Dalian Spindle Environmental           750,121.11            52,658.50
                    Facilities Co., Ltd
Accounts receivable Dalian Fuji Bingshan Control           550,800.00            49,630.32
                    System Co., Ltd.
Accounts receivable Dalian Shentong Electric Co., Ltd       94,897.33             6,661.79
Contract asset      Company under direct/indirect
                    Control of Panasonic Co., Ltd        1,982,037.10        612,603.41

Contract asset      Dalian Bingshan Wisdom Park
                    Co., Ltd                               109,569.10            19,340.79

                                              183
                                                                Opening Balance
       Item                    Related party                                 Bad debt
                                                         Book Balance
                                                                            Provision
Prepayment           Dalian Shentong Electric Co., Ltd     8,402,006.53                     -
                     Company under direct/indirect
Prepayment           Control of Panasonic Co., Ltd         3,825,488.41
                     Bingshan Technology Service
Prepayment           (Dalian) Co., Ltd.                   825,789.25                      -

Prepayment           Dalian Bingshan Group Huahuida
                     Financial Leasing Co., Ltd              308,310.02                     -
Prepayment           BAC Dalian Co., Ltd                      58,513.00                     -
Prepayment           Dalian Spindle Environmental
                     Facilities Co., Ltd                      36,455.00                     -
                     Dalian Fuji Bingshan Vending
Other receivable     Machine Co., Ltd                        278,020.00           10,175.53
                     Bingshan Technology Service
Other receivable                                             100,000.00           69,410.00
                     (Dalian) Co., Ltd.

 2. Accounts Payable due from Related Party

                                                           Closing         Opening
     Item                     Related party
                                                          Balance          Balance
Accounts           Jiangsu Jingxue Insulation
Payable            Technology Co., Ltd                   65,052,640.75    68,660,038.43
Accounts
                   BAC Dalian Co., Ltd                   21,731,458.82    20,678,948.10
Payable
Accounts
                   Sonyo Cold Chain (Dalian)Co., Ltd     10,067,451.24                  -
Payable
Accounts           Dalian Bingshan Metal Technology
Payable            Co., Ltd                               9,745,165.83    14,347,841.71
Accounts
                   Dalian Honjo Chemical Co., Ltd.        6,672,533.86                  -
Payable
Accounts           Dalian Bingshan Part Technology
Payable            Co., LTD                               6,266,070.43     7,264,112.80
Accounts           Jiangsu Jingxue Insulation
Payable            Environmental Engineering Co., Ltd     2,896,300.00     2,896,300.00
Accounts           Company under direct/indirect
Payable            Control of Panasonic Co., Ltd            864,418.25    11,517,452.19
Accounts           Dalian Spindle Environmental
Payable            Facilities Co., Ltd                      794,006.00     1,247,400.00
Accounts           Dalian Fuji Bingshan Control
Payable            System Co., Ltd.                         502,571.47     1,942,256.73
Accounts           Bingshan Technology Service
Payable            (Dalian) Co., Ltd.                     126,241.74      282,405.30
Accounts
                   Dalian Shentong Electric Co., Ltd                 -     1,396,176.88
Payable
                   Dalian Bingshan Group Huayida
Other payable                                            15,000,000.00                  -
                   Commercial Factoring Co., Ltd.
                   Dalian Bingshan Group Huahuida
Other payable                                             7,407,941.90                  -
                   Financial Leasing Co., Ltd.

                                                184
                                                           Closing         Opening
      Item                     Related party
                                                           Balance         Balance
                     Company under direct/indirect
Other payable                                              3,273,305.50    4,502,046.38
                     Control of Panasonic Co., Ltd
                     Bingshan Technology Service
Other payable                                               104,625.50                -
                     (Dalian) Co., Ltd.
Other payable        Sonyo Cold Chain (Dalian)Co., Ltd       91,779.71                -
                     Jiangsu Jingxue Insulation
Other payable                                                70,000.00      666,864.48
                     Environmental Engineering Co., Ltd
                     MHI Bingshan Refrigeration
Other payable                                                         -     170,000.00
                     (Dalian) Co., Ltd.
                     Dalian Jingxue Freezing Equipment
Other payable                                                         -      70,000.00
                     Co., Ltd.
                     Dalian Bingshan Group Huahuida
Other payable                                                         -        1,172.61
                     Financial Leasing Co., Ltd.
                     Bingshan Technology Service
Contract liability                                         2,337,426.58               -
                     (Dalian) Co., Ltd.
                     Linde Hydrogen Fueltech (Dalian)
Contract liability                                         2,138,974.27    2,274,454.09
                     Co., Ltd
                     Company under direct/indirect
Contract liability                                          313,952.83     1,299,686.95
                     Control of Panasonic Co., Ltd
Contract liability   Sonyo Cold Chain (Dalian)Co. Ltd        35,605.27                -
                     Dalian Bingshan Group Huahuida
Contract liability                                                    -    4,206,191.86
                     Financial Leasing Co., Ltd
                     Dalian Spindle Environmental
Contract liability                                                    -     736,424.50
                     Facilities Co., Ltd
Other current        Linde Hydrogen Fueltech (Dalian)
liability            Co., Ltd                               319,616.84                -
Other current        Bingshan Technology Service
liability            (Dalian) Co., Ltd.                   303,865.45                -
Other current        Company under direct/indirect
liability            Control of Panasonic Co., Ltd           35,021.95      130,044.39
Other current
                     Sonyo Cold Chain (Dalian)Co., Ltd         4,628.68               -
liability
Other current        Dalian Bingshan Group Huahuida
liability            Financial Leasing Co., Ltd                       -     546,804.94
Other current        Dalian Spindle Environmental
liability            Facilities Co., Ltd                              -      81,006.69
                     Dalian Bingshan Group Huahuida
Lease payable                                               656,980.83      983,501.51
                     Financial Leasing Co., Ltd
Non-current
                     Dalian Bingshan Group Huahuida
liability due                                             25,140,961.04   34,388,781.83
                     Financial Leasing Co., Ltd
within 1 year
Long-term            Dalian Bingshan Group Huahuida
payable              Financial Leasing Co., Ltd           10,331,937.30   31,009,644.16
Short-term           Dalian Bingshan Group Huayida
borrowing            Commercial Factoring Co., Ltd.        2,976,345.47               -


        iv.     Related Party Commitment

              None

                                               185
      v.     Others

            None

XIII. Share-Based Payment
     None

XIV. Contingency & commitment

1.   Commitment
     None

2.   Contingency
     Up to December 31, 2023, guarantee obligations undertaken by the Company due to
     financial leasing.

     The Company sold refrigerating house equipment to Guizhou Pubu Cold Chain Food
     Investment Co., Ltd (“Pubu Cold Chain”) in the form of financial leasing. The Company as
     a seller singed finance lease contract with Dalian Bingshan Group Huahuida Financial
     Leasing Co., Ltd (hereinafter referred to as ‘Huahuida’) as both a buyer and a lessor and
     Pubu Cold Chain as a lessee. The contract price is 25.705million Yuan. In case the lease
     premium is delayed by the lessee, the Company needs to pay lease premium on behalf of
     the lessee and be obliged to the buy back responsibility. Pubu Cold Chain issued an
     unconditional, irrevocable and joint liability counter guarantee, and the Company is the
     beneficiary. Guarantee scope covers the full liability because of the sales in the form of
     finance lease. As at 31 December 2023, the balance of the guarantee obligation of the
     financial lease is RMB 6.5958million Yuan.

     The Company sold water chiller and heat pump to Shangdong Jiechuang Energy
     Technology Co., Ltd (“Shandong Jiechuang”) in the form of financial lease. The Company
     as a seller singed finance lease contract with Huahuida as both a buyer and a lessor and
     Shandong Jiechuang as a lessee. The contract price is 6.998million Yuan. Shandong
     Jiechuang had made 10% down payment, and remaining 6.2982million Yuan is underlined
     the leasing contract amount. In case the lease premium is delayed by the lessee, the
     Company needs to pay lease premium on behalf of the lessee and be obliged to the buy
     back responsibility. Shandong Jiechuang issued an unconditional, irrevocable and
     joint liability counter guarantee, and the Company is the beneficiary. Guarantee scope
     covers the full liability because of the sales in the form of financial lease. As at 31
     December 2023, the balance of the guarantee obligation of the financial lease is
     RMB4.4262 million Yuan.


                                              186
The Company sold refrigerating house equipment to Liuyang Zhongjie Technology
Investment Co., Ltd (“Liuyang Zhongjie”) in the form of financial lease. The Company as a
seller singed finance lease contract with Huahuida as both a buyer and a lessor and Liuyang
Zhongjie as a lessee. The contract price is 9.831million Yuan. In case the lease premium is
delayed by the lessee, the Company needs to pay lease premium on behalf of the lessee and
be obliged to the buy back responsibility. Liuyang Zhongjie issued an unconditional,
irrevocable and joint liability counter guarantee, and the Company is the beneficiary.
Guarantee scope covers the full liability because of the sales in the form of financial lease.
As at 31 December, 2023, the balance of the guarantee obligation of the financial lease is
RMB 5.3227million Yuan.

The Company sold refrigeration equipment, air conditioning and production line equipment
to Shanxi Yiming Food Co., Ltd (‘Shanxi Yiming’) in the form of financial lease. The
Company as a seller singed finance lease contract with Huahuida as both a buyer and a
lessor and Shanxi Yiming as a lessee. The contract price is 28.2311million Yuan. In case
the lease premium is delayed by the lessee, the Company needs to pay lease premium on
behalf of the lessee and be obliged to the buy back responsibility. Shareholders Shanxi
Yiming and nature person issued an unconditional, irrevocable and joint liability counter
guarantee, and the Company is the beneficiary. Guarantee scope covers the full liability
because of the sales in the form of financial lease. As at 31 December, 2023, the balance of
the guarantee obligation of the financial lease is RMB 23.1802million Yuan.

Dalian    Bingshan-RYOSETSU               Quick     Freezing   Equipment   Co.,Ltd   (‘Bingshan-
RYOSETSU’), the subsidiary of the Company sold refrigeration equipment to Jilin Fuyu
Agricultural Technology Co., Ltd (‘Jinlin Fuyu’) in the form of financial lease. Bingshan-
RYOSETSU as a seller singed finance lease contract with Huahuida as both a buyer and a
lessor and Jinlin Fuyu as a lessee. The contract price is 20.50million Yuan. In case the lease
premium is delayed by the lessee, Bingshan- RYOSETSU needs to pay lease premium on
behalf of the lessee and be obliged to the buy back responsibility. Shareholders Jinlin Fuyu
and nature person issued an unconditional, irrevocable and joint liability counter guarantee,
and Bingshan- RYOSETSU is the beneficiary. Guarantee scope covers the full liability
because of the sales in the form of financial lease. As at 31 December, 2023, the balance of
the guarantee obligation of the financial lease is RMB 18.8146million Yuan.

Until 31 December, 2023, the balance of all guarantee obligation of the financial lease is
RMB 58.3395 million Yuan. There is no situation where the Company needs to undertake
the liability as the lessees’ default.

There are no other significant or contingent matters to be disclosed until December, 2023


                                                  187
XV. Events after the Balance Sheet Date

     1. Unadjusted significant events

     None

     2. Information about profit distribution

 Item                                                              Content
 Planned profit/ dividend distribution                                               25,296,375.21

                                             The 12nd meeting of the 9th generation of board
                                             approved the profit appropriation policy for the year
 Profit/dividend      approved           for of 2023, based on 843,212,507.00 numbers of share
 distribution declaration                    in total, paying out cash dividend of 0.3Yuan for
                                             every 10 shares (before tax) and cash dividend of B
                                             shares are paid in Hong Kong dollars.

    3. Sales Return
    There is no significant sales return after the balance sheet date.

    4. Others
    Except the subsequent event disclosed above, the Company has no other significant
    subsequent event.

XVI. Other Significant Events

  1. Error correction and effect in previous period
   No.

  2. Debt Restructuring
   In 2023, Bingshan Group Engineering Co., Ltd, Tianjin Sunac Shengyuan Real Estate Co.,
   LTD. (hereinafter referred to as "Tianjin Sunac") and Guangzhou Wanda Cultural Tourism
   City Investment Co., LTD. (hereinafter referred to as "Guangzhou Wanda Cultural Tourism")
   signed a commercial contract, and Guangzhou Wanda Cultural Tourism will repay the debt to
   Bingshan Group Engineering Co., Ltd with the right-of -use of 17 apartments and parking
   space that it subscribed for Tianjin SunAC. The price of the house and parking space is
   21.707 million Yuan, the debt written off amount is 15.22 million yuan, and Bingshan Group
   Engineering Co., Ltd pays the difference of 6.5476 million Yuan in cash. Bingshan Group
   Engineering Co., Ltd paid a total of 6.54 million Yuan in two separate payments in 2023, and
   the above properties have completed the record registration of the contract in the Tianjin
   Municipal Commission of Housing and Construction in 2023.

                                                 188
  3. Asset exchange
   (1) The exchange of non-monetary assets

   No.

   (2) The exchange of other assets

   No.

  4. Annuity Plan
     No.

  5. Operation termination
     No.

  6. Segment Information

The management of the group divided the business into 2 segments based on the geographic
area: Northeast China and Central China. The Northeast is the Company’s general headquarters
and the subsidiaries registered in Dalian. The Central includes Chengdu Bingshan Refrigeration
Engineering Co., Ltd, Wuhan New World Refrigeration Industrial Co., Ltd and its subsidiary,
Wuhan Lanning Energy Technology Co., Ltd. and Wuhan New World Air-conditioning Refrigeration
Engineering Co., Ltd.
 (1) The basis and accounting policies of reporting segments
The internal organization structure, management requirements and internal report scheme are
the determination basis for the Company to set the operating segments. The segments are those
satisfied the following requirements.

     1). The segment can generate revenue and incur expenses.

     2). The management personnel can regularly evaluate the operation results of segments and
         allocate resource, assess its performance.

     3). The financial situation, operation results, cash flow and other accounting information of
         segments can be acquired.

The group confirms the report segments based on the operating segments. The transfer price
among segments is set base on the market price. The assets and related expenses in common use
are allocated to different segments based on their proportion of revenue.

(2) The financial information of reporting segments

                                                          Amount unit :Ten thousand Yuan
                                        Northeast     Central
              Items                                              Offset          Total
                                         China        China
 1 Operating income                      530,652.74   32,697.34      -81,755.93       481,594.15
                                                189
                                        Northeast       Central
                   Items                                                 Offset          Total
                                         China          China
   2 Cost                                452,202.87     28,961.85      -80,604.97       400,559.75
         Impairment loss on assets         -1,598.13       -19.38          176.94         -1,440.57
       Impairment loss on credit           -5,471.28      -825.92          -676.01        -6,973.21
       Depreciation and
   amortization                           14,208.67        833.36                 -      15,042.03
   3 Investment income from
   associates and joint venture             -430.08         45.75          -104.14          -488.47
   4 Operating profits(loss)              23,385.81     -1,695.78      -15,169.41          6,520.62
   5 Income tax                             1,117.34        89.36          -103.53         1,103.17
   6 Net profit(loss)                     22,268.47     -1,785.14      -15,065.88          5,417.45
   7 Total assets                       1,068,080.89    47,663.74     -299,459.80       816,284.83
   8 Total liabilities                   548,471.77     36,864.46      -79,455.64       505,880.59
  (3) Others

     None

     7. Other important transactions and matters affect the investor's decision
  The group hasn’t had other important transactions and matters affect the investor's decision in
  this period.

  XVII. Notes to the Main Items of the Financial Statements of Parent Company

     1. Accounts receivable

     (1) Bad debt provisions under accounting aging analysis method:

                 Aging                  Closing Balance                  Opening Balance
 Within 1 year                               457,075,717.70                           536,467,765.87
1-2 years                                    124,339,052.45                            71,727,073.34
2-3 years                                     58,073,083.27                            56,755,645.42
Over 3 years                                 109,679,441.52                            72,661,252.26
             3-4 years                        49,782,646.14                             3,330,453.62
             4-5 years                         2,186,288.76                            21,498,453.03
            Over 5 years                      57,710,506.62                            47,832,345.61
 Total                                       749,167,294.94                           737,611,736.89

     (2) Accounts receivable category

                                                       Closing Balance
          Item                 Booking balance                    Provision
                                                                                      Booking value
                              Amount            %             Amount          %

                                                 190
                                                Closing Balance
        Item            Booking balance                  Provision
                                                                              Booking value
                      Amount          %               Amount          %
Bad debt provision
on group             749,167,294.94       100.00   136,234,112.03     18.18   612,933,182.91
(1) Accounting age
    as characters    492,240,628.86        65.71   136,234,112.03     27.68   356,006,516.83
(2) Related party
    within
    consolidation    256,926,666.08        34.29                  -       -   256,926,666.08
    scope
Total                749,167,294.94       100.00   136,234,112.03     18.18   612,933,182.91




                                          191
                (Continued)

                                                              Opening Balance
                 Item                 Booking balance                     Provision                Booking
                                     Amount             %              Amount           %             balance
        Bad debt provision
                                   737,611,736.89       100.00      107,657,087.39     14.60     629,954,649.50
        on group
        (1) Accounting age
                                   388,615,076.25        52.69      107,657,087.39     27.70     280,957,988.86
            as characters
        (2) Related party
            within
                                   348,996,660.64        47.31                     -        -    348,996,660.64
            consolidation
            scope
        Total                      737,611,736.89       100.00      107,657,087.39     14.60     629,954,649.50

            1) Bad debt provisions on group basis

                                                                   Closing Balance
                   Aging                                            Provision for bad     Drawing Proportion
                                       Accounts receivable
                                                                          debts                    (%)
        Within 1 year                          204,061,949.25           14,325,148.84                        7.02
    1-2 years                                  120,426,154.82           20,159,338.32                       16.74
    2-3 years                                   58,073,083.27           17,903,931.57                       30.83
    3-4 years                                   49,782,646.14           24,557,779.34                       49.33
    4-5 years                                    2,186,288.76             1,577,407.34                      72.15
    Over 5 years                                57,710,506.62           57,710,506.62                      100.00
        Total                                  492,240,628.86          136,234,112.03                 —

            (3) Bad debt provision

                                                    Change during the year
                                                                                                           Closing
Category        Opening balance
                                     Accrued        Collected/                                             Balance
                                                                     Written-off         Other
                                                    reversed
Bad debt
                  107,657,087.39   27,893,374.74               -      758,749.50       1,442,399.40     136,234,112.03
provision

Total             107,657,087.39   27,893,374.74               -      758,749.50       1,442,399.40     136,234,112.03




                                                        192
  (4) Accounts receivable written off in current period.

Item                                                            Written off amount
Receivable actually written off                                                      758,749.50

   (5) Based on closing balance ranking, sum of the top five significant receivable and contract
asset are 328,102,168.30 Yuan, representing 37.42% of total receivables and contract asset at the
year end. 50,866,005.17Yuan bad debt provision is provided respectively.

  2. Other Receivables

               Item                        Closing Balance               Opening Balance
Interest receivable                                              -                              -
Dividend receivable                               110,000,000.00                                -
Other receivable                                     28,883,665.74                36,021,805.53
Total                                            138,883,665.74                   36,021,805.53

   2.1 Dividend receivable

               Item                        Closing Balance               Opening Balance
Sonyo Compressor (Dalian)Co., Ltd.               110,000,000.00                                 -
Total                                            110,000,000.00                                 -

  2.2 Other receivable

  (1) The category of other receivables

Items                                      Closing Balance               Opening Balance
Receivables and payables                             20,260,866.63                22,444,622.16
Deposits                                              8,478,407.11                13,733,003.58
Petty cash                                              580,451.46                   589,402.48
Total                                                29,319,725.20                36,767,028.22




                                               193
   (2) Other receivable listed by account aging


                 Aging                           Closing Balance                 Opening Balance

 Within 1 year                                               3,049,940.86                   10,080,508.11
1-2 years                                                    3,316,384.23                    4,307,883.00
2-3 years                                                    1,315,000.00                   20,750,000.00
Over 3 years                                              21,638,400.11                      1,628,637.11
               3-4 years                                  20,210,000.00                       430,072.11
               4-5 years                                      229,835.11                                -
               Over 5 years                                  1,198,565.00                    1,198,565.00
 Total                                                    29,319,725.20                     36,767,028.22

   (3) The bad debt provision of other receivable

                            1st stage            2nd stage               3rd stage
                           Expected          Expected credit        Expected credit loss
 bad           debt
                           credit loss        loss within the        within the whole           Total
 provision
                           within 12         whole period (no       period (impairment
                            months            impairment)                incurred)
 Opening balance            596,484.59                          -            148,738.10       745,222.69
 Opening balance
                               —                   —                      —                   —
 during the year
 --transfer to the
                                         -                      -                       -               -
 2nd stage
 --transfer to the
                                         -                      -                       -               -
 3rd stage
 --reverse to the
                                         -                      -                       -               -
 2nd stage
 ----reverse to the
                                         -                      -                       -               -
 1st stage
 Accrued                                 -                      -                       -               -
 Reverse                    273,476.68                          -                       -     273,476.68
 Cancelation                             -                      -                       -               -
 Written off                  35,686.55                         -                       -       35,686.55
 Other movement                          -                      -                       -               -
 Closing balance            287,321.36                          -            148,738.10       436,059.46

     (4) Bad debt provision details


                                                    194
                                                   Change during the year
                    Opening                                                                          Closing
Category                                           Collected/
                     balance       Accrued                          Written-off     Others           Balance
                                                   reversed
Bad debt
                     745,222.69            -        273,476.68        35,686.55              -        436,059.46
provision
Total                745,222.69            -        273,476.68        35,686.55              -        436,059.46

        (5) Other receivables from the top 5 debtors

                                                                                  % of           Closing
                                               Closing
          Name          Category                                  Aging        the total     Balance of
                                             Balance
                                                                                  OR         Provision
        Top 1          Receivable        20,000,000.00           3-4 years         68.21                   -
        Top 2         Other deposit       1,100,000.00         Over5 years,         3.75          40,260.00
        Top 3          Bid deposit        1,000,000.00           1-2 years          3.41          36,600.00
        Top 4          Bid deposit             800,000.00      Within 1 year        2.73          29,280.00
        Top 5          Bid deposit             800,000.00      Over5 years,         2.73          29,280.00
        Total               —           23,700,000.00              —             80.83         135,420.00




                                                         195
  3. Long-term equity investments

  (1) Category of long-term equity investments

                                                        Closing Balance                                                  Opening Balance
               Item
                                    Closing Balance         Provision           Book Value        Opening Balance            Provision         Book Value
    Investment of subsidiaries       2,416,830,861.29                     -   2,416,830,861.29        2,163,545,361.29                   -   2,163,545,361.29
    Investment of affiliates
                                       513,550,283.58                     -    513,550,283.58          557,452,792.51                    -    557,452,792.51
    and JV
    Total                            2,930,381,144.87                     -   2,930,381,144.87        2,720,998,153.80                   -   2,720,998,153.80

  (2) Investments of subsidiaries

                                                        Provision for                     Increase/Decrease
                                                                                                                                                    Provision for
                                        Beginning       impairment
             Investee                                                                               Provision for                 Ending balance    impairment
                                         balance        at beginning      Increased       Decreased                      Others
                                                                                                    impairment                                       at year end
                                                           of year
Dalian Bingshan Group
Engineering Co., Ltd                   193,749,675.77               - 100,000,000.00              -                 -         -    293,749,675.77               -
Dalian Bingshan Group Sales Co.,
Ltd                                     20,722,428.15               -                 -           -                 -         -     20,722,428.15               -
Dalian Bingshan Air-Conditioning
Equipment Co., Ltd                      45,272,185.00               -     8,000,000.00            -                 -         -     53,272,185.00               -
Dalian Bingshan Guardian
Automation Co., Ltd                     50,638,361.52               -                 -           -                 -         -     50,638,361.52               -
Dalian Bingshan-RYOSETSU
Quick Freezing Equipment Co.,           59,356,051.19               -                 -           -                 -         -     59,356,051.19               -
Ltd



                                                                              196
                                                                       Provision for                             Increase/Decrease
                                                                                                                                                                                      Provision for
                                                Beginning              impairment
                Investee                                                                                                   Provision for                       Ending balance         impairment
                                                 balance               at beginning            Increased         Decreased                      Others
                                                                                                                           impairment                                                  at year end
                                                                          of year
Dalian Universe Thermal
Technology Co., Ltd                             48,287,589.78                        -                       -           -                 -               -     48,287,589.78                          -
Wuhan New World Refrigeration
Industrial Co., Ltd                            184,674,910.81                        -                       -           -                 -               -    184,674,910.81                          -
Dalian Bingshan Engineering &
Trading Co., Ltd                                71,537,064.86                        -                       -           -                 -               -     71,537,064.86                          -
Sonyo Compressor (Dalian)Co.,
Ltd                                          1,380,455,603.23                        -                       -           -                 -               - 1,380,455,603.23                           -
Sonyo Refrigeration System
(Dalian) Co., Ltd                              108,851,490.98                        -                       -           -                 -               -    108,851,490.98                          -
Sonyo Refrigeration (Dalian) Co.,
Ltd                                                               -                  - 145,285,500.00                    -                 -               -    145,285,500.00                          -
Total                                        2,163,545,361.29                        - 253,285,500.00                    -                 -               - 2,416,830,861.29                           -


    (3) Joint ventures& affiliated companies

                                                                                                        Increase/Decrease
                                                                                    Gains and                                                                                                             Provision
                                      Provision for                                             Adjustment
                      Beginning                                                        losses                                                              Provision                                         for
     Investee                         impairment                                                  of other     Changes of          Cash bonus or                                    Ending balance
                       balance                        Increased       Decreased     recognized                                                                for      Others                           impairment
                                      at beginning                                              comprehensi other equity         profits announced
                                                                                     under the                                                            impairment                                     at year end
                                         of year                                                 ve income
                                                                                  equity method
1. Affiliated
company
Dalian Honjo
Chemical Co., Ltd      9,819,096.80              -            -               -          -759,072.44             -           -             -900,000.00             -            -        8,160,024.36              -
Keinin-Grand
Ocean Thermal
Technology            60,089,313.51              -            -               -          -509,338.51             -           -            -2,000,000.00            -            -       57,579,975.00              -
(Dalian) Co., Ltd



                                                                                                       197
                                                                                                    Increase/Decrease
                                                                                Gains and                                                                                                         Provision
                                      Provision for                                         Adjustment
                     Beginning                                                     losses                                                         Provision                                          for
        Investee                      impairment                                              of other     Changes of     Cash bonus or                                    Ending balance
                      balance                         Increased   Decreased     recognized                                                           for      Others                            impairment
                                      at beginning                                          comprehensi other equity    profits announced
                                                                                 under the                                                       impairment                                      at year end
                                         of year                                             ve income
                                                                              equity method
Dalian Fuji
Bingshan Vending     111,101,339.93              -            -           -      -43,490,921.84         -           -                       -             -            -        67,610,418.09              -
Machine Co., Ltd
MHI Bingshan
Refrigeration         15,401,109.10              -            -           -        1,142,546.44         -           -                       -             -            -        16,543,655.54              -
(Dalian) Co., Ltd.
Dalian Fuji
Bingshan Vending
Machine Sales Co.,                               -            -           -                  -          -           -                       -             -            -                    -              -
Ltd
Jiangsu Jingxue
Insulation
Technology Co.,      140,124,248.76              -            -           -        5,840,827.15         -           -            -1,610,172.00            -            -       144,354,903.91              -
Ltd
Bingshan Metal
Technical Service
(Dalian) Co.,      175,313,807.46              -            -           -       31,071,464.97         -           -           -33,134,422.30            -            -       173,250,850.13              -
Ltd.
Dalian Bingshan
Group Huahuida
Financial Leasing     45,603,876.95              -            -           -        1,197,707.15         -           -             -751,127.55             -            -        46,050,456.55              -
Co., Ltd
Total                557,452,792.51              -            -           -       -5,506,787.08         -           -           -38,395,721.85            -            -       513,550,283.58              -




                                                                                                  198
   4. Operating revenue and cost

                                   Current year                         Last year
Item
                             Revenue              Cost          Revenue              Cost
Revenue from main
                       1,075,630,556.46 894,335,541.56        976,567,011.13 853,599,677.62
operation
Revenue from other
                             71,936,541.24   55,064,727.51     71,575,982.20     56,250,851.97
operation
Total                  1,147,567,097.70 949,400,269.07       1,048,142,993.33 909,850,529.59

   5. Investment income

Items                                                        Current year        Last year
Long-term equity investment gain under cost method           137,049,291.85     153,482,615.76
Long-term equity investment gain under equity method          -5,506,787.08     -37,651,689.22
Gain from holding of other non-current financial assets        5,782,304.24      20,657,215.39
Discounting fees for bank acceptance note                       -159,560.15                  -
Gain from disposing long-term equity investment                             -   110,083,973.75
Gain from disposal of other non-current financial assets                    -    43,296,525.04
Gain on debt restructuring                                                  -                -
Total                                                        137,165,248.86     289,868,640.72

   6. Others

   None

XVIII. Approval of Financial Statements

  The parent and consolidated financial statements of the Company were approved by the Board
  of Directors of The Company on April 24, 2024.




                                               199
XIX. Supplementary Information to the Financial Statements

1. Non-operating profit or loss
 Items                                                                     Current year    Notes
 Gain or loss from disposal of non-current assets (including written
                                                                           -6,656,241.40
 off part of the impairment provision)
 Government grants recorded into profit or loss                             8,263,130.89
 The gain or loss of fair value changes arising from the holding of
 financial assets and financial liabilities by non-financial enterprises
                                                                           14,073,910.32
 and the loss or profit arising from the disposal of them, apart from
 the effective hedging for the normal business operation.
 Expenses for using funds from non-financial institution recognized
                                                                                       -
 in current profit/loss
 Profits/loss from investments or management of assets entrusted by
                                                                                       -
 others
 Investment income on entrusted loan                                                   -
 Assets impairment provision accrued due to force majeure, e.g.:
                                                                                       -
 suffering natural disasters
 Reversal of impairment provision of accounts receivable separately
                                                                            3,784,207.57
 tested for impairment
 Gains from acquisition of subsidiary or associates when initial cost
 is less than the fair value of identifiable net asset of invested                     -
 company
 Net gain/loss of subsidiary from combination under same control
                                                                                       -
 between the beginning of year and consolidation date.
 Profits/loss from non-monetary assets exchange                                        -
 Profit or loss from debts restructuring                                    1,791,602.29
 One-off expenses incurred for discontinued operation activities such
                                                                            3,928,060.93
 as the expense of relocating employees
 Effects of gain/loss from one-off adjustments of gain/loss based on
                                                                                       -
 laws and regulations of taxation and accounting.
 Share payment arising from the cancellation or modification of
                                                                                       -
 share incentive plans
 For cash settled share payment, gains and losses arising from
                                                                                       -
 changes in the fair value of employee payable after the exercise date
 The profits/gains from changes of fair value for investment property
                                                                                       -
 subsequently measured at fair value model
 Gain/loss on excessive part from the transaction where the trading
                                                                                       -
 price is obviously unfair.
                                               200
 Items                                                                   Current year        Notes
 Gains/ loss from contingencies beyond the normal business               10,206,786.86
 Custodian fees obtained from entrusted operations                                       -
 Non-operating revenue and expense besides the above items                2,831,968.96
 Other profit or loss                                                                    -
 Subtotal                                                                38,223,426.42
 Effect on income tax                                                     5,162,725.13
 Attributable to minority shareholders’ equity (after tax)                 168,249.63
 Total                                                                   32,892,451.66
2. Return on equity and earnings per share
                                                                         Earnings per share
                                                        Weighted
                                                                                 (EPS)
 Profit of report period                              average return
                                                                         Basic           Diluted
                                                   on net assets (%)
                                                                          EPS                EPS
 Net profit attributable to shareholders of
                                                              1.63        0.06               0.06
 parent company
 Net profit after deducting non-recurring gains
 and losses attributable to shareholders of                   0.54        0.02               0.02
 parent company




                              Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd
                                                        April 24, 2024




                                                201